RPT-Fed's Schmid says he dissented because inflation is too hot, policy should be modestly restrictive

By Howard Schneider

WASHINGTON, Dec 12 (Reuters) - Kansas City Federal Reserve President Jeffrey Schmid said he dissented against the central bank's quarter point rate cut this week because inflation is "too hot" and monetary policy should remain modestly restrictive to keep it in check.

"Right now, I see an economy that is showing momentum and inflation that is too hot, suggesting that policy is not overly restrictive," Schmid said in a statement released as the blackout on public comments lifted following the Fed's 9-3 decision on Wednesday to lower the benchmark policy rate to the 3.5% to 3.75% level.

Chicago Fed President Austan Goolsbee joined Schmid in voting to keep the policy rate steady, while Fed Governor Stephen Miran again dissented in favor of a larger half-point reduction.

Schmid said that in his view not much had changed since he dissented against a rate cut in October, with inflation above target and the labor market "largely in balance."