Svmuu News Federal Reserve Schmid said Wednesday that excessive inflation remains Federal Reserve a key issue that needs to be addressed, but he did not specify how monetary policy should respond. Schmid said, “I think we still have work to do on inflation,” while adding, “I think the employment situation is quite good.”He did not elaborate on how these factors influence his assessment of the monetary policy outlook. Schmied previously expressed skepticism Federal Reserve about last year’s push for rate cuts, when officials lowered the target rate range to 3.5% to 3.75%.Markets expect Federal Reserve to cut rates further this year, but officials have provided almost no guidance. Schmid also addressed Federal Reserve’s balance sheet, noting that internal discussions have focused on understanding the appropriate level of reserves required for the financial system. He pointed out that the large volume of mortgage-backed securities held from past bond-buying operations Federal Reserve continues to keep housing borrowing costs low.Given the current Federal Reserve size of the central bank’s holdings of mortgage-backed securities, mortgage rates “are likely 75 to 100 basis points lower than they would otherwise be.”