Jeff Schmid Flags Inflation Risk as Hopes of December Fed Rate Cut Fade

Kansas City Fed President Jeff Schmid, who dissented in favor of keeping rates unchanged at the October FOMC meeting, has again raised concerns over rising inflation. He suggested that he was once again likely to vote against another Fed rate cut because of the negative impact it could have on inflation. This comes as hopes of a December cut fade, sparking bearish sentiment in the crypto market.

Schmid Says Further Fed Rate Cuts Could Have Lasting Effects On Inflation

As part of his remarks at the 2025 Energy Conference, the Kansas City Fed president stated that further cuts could have longer-lasting effects on inflation as their commitment to the 2% objective comes into question. This came alongside his opinion that more cuts will not do much to patch any cracks in the labor market.

As such, Schmid has indicated that inflation risks should be their primary concern at the moment, which is why he may not support another Fed rate cut at the December FOMC meeting. He noted that the inflation risk was his rationale for dissenting against the rate cut at the October meeting and that it continues to guide his thoughts heading into the December meeting.

However, Schmid added that his decision at that meeting will be informed by discussions and information gathering in the coming weeks. Meanwhile, he also opined that the current stance of monetary policy is only modestly restrictive and suggested that this was best at the moment, given that inflation was too “hot.”

Schmid’s remarks come as hopes of a December Fed rate cut fade. As CoinGape reported, the odds of a 25 basis point rate cut next month have dropped below 50% from as high as 70%, with traders betting more on the Fed keeping rates unchanged.

This has sparked bearish sentiments in the crypto market, with Bitcoin crashing below $100,000 yesterday. Notably, BTC had rallied to new highs before the Fed lowered interest rates in September and October. However, uncertainty around another cut appears to be holding the flagship crypto down this time.

Schmid Also Comments On Quantitative Easing

The Kansas City Fed president noted that he supported ending the Fed’s balance sheet run-off by December 11. However, in the long term, he would like them to operate with the smallest and least distortive balance sheet that they can.

Schmid explained that a large balance sheet increases the Fed’s footprint in financial markets, distorts the price of duration and the slope of the yield curve, and potentially blurs the line between monetary and fiscal policy. Notably, the end of the Fed’s balance sheet run-off is projected to be one of the catalysts that can spark a recovery in the crypto market alongside a potential Fed rate cut.

Market expert Raoul Pal has predicted a liquidity flood once quantitative tightening (QT) ends in December and the balance sheet begins to crawl higher. He expects the dollar to weaken when that happens, which is a positive for Bitcoin and the broader crypto market.

Hedge fund manager James Lavish also alluded to the imminent end of QT as one of the bullish catalysts for Bitcoin. He added that the government has reopened and is about to inject over $100 billion of pent-up liquidity into the economy.

Good morning.

The Fed has announced they are ending QT, the government is re-opening and injecting over $100 billion of pent-up liquidity into the economy, and Bitcoin sentiment is as bad as I have seen in years. Do with this what you will.

And have a great Friday.

— James Lavish (@jameslavish) November 14, 2025