By Howard Schneider
WASHINGTON, July 16 (Reuters) - Inflation is proving persistent across a broad range of goods and services, and remains the focus of monetary policy given a stable labor market, Kansas City Fed president Jeff Schmid said on Thursday.
Schmid, who is not a voter this year on interest rate policy, stopped short of backing an interest rate hike in remarks prepared for delivery at an economics forum in Nebraska.
But he called current inflation running roughly double the Fed's 2% target
"concerning", and said he disagreed with those who feel it is the result of one-time factors like high oil prices and is thus likely to dissipate on its own.
"I am uncomfortable ever assuming that a burst of inflation is likely to be temporary," said Schmid. "Inflation shocks are not intrinsically transitory."
Though inflation data this week was lower than expected on the basis of recently lower oil prices, Schmid said, "it would be premature to put too much weight on a single data point relative torecent trends...With the price of oil once again rising, it is uncertain how persistent any relief on energy will be."
The Fed meets on July 28-29, with some policymakers in their final public remarks before the meeting opening the door to a rate increase if inflation does not begin to subside in coming months. Investors expect a rate hike in September.
New Fed Chairman Kevin Warsh has given no hint on his views, saying that he wants to take a more rigorous approach to "forward guidance" on interest rates, and not offer it too freely, if at all.
His colleagues, however, have continued making their opinions known. Schmid on Thursday said he felt talking about the economy and monetary policy outcomes was important to sustain the Fed's accountability, given its unelected status and independence in setting interest rates.
"Independence demands accountability. And we can only be accountable if we are transparent on how we arrive at the decisions we make," Schmid said. "Transparency is necessary to avoid the perception that our decisions are politically influenced. If we don’t explain our decisions, the public is left to speculate...Transparency allows the public to help policymakers identify and avoid blind spots."
(Reporting by Howard Schneider; Editing by Chizu Nomiyama )
