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(Bloomberg) — Federal Reserve Bank of Kansas City President Jeff Schmid on Wednesday sounded a note of caution about how much more the US central bank will need to lower interest rates.

“While now is the time to begin dialing back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle,” Schmid said in prepared remarks for a speech at an energy conference co-hosted by the Kansas City and Dallas reserve banks. 

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Policymakers cut the federal funds rate by a quarter percentage point at their Nov. 6-7 meeting and refrained from committing to another similar-sized move at their next gathering in December. That followed a half-point reduction at their September meeting, which kicked off the current rate-cutting campaign. 

Other Fed policymakers speaking Wednesday expressed similar uncertainty about how far the Fed can reduce rates.

Fed officials started normalizing policy after holding rates at a more-than-20-year high for over a year, as inflation cooled near to their 2% target, and amid some signs of weakening in the labor market.

Investors last week pared back bets on another rate reduction at the December meeting. But a report released earlier Wednesday showed inflation in October rose at a pace in line with economists’ expectations and not at a faster pace, as some investors had feared. That drove back up market bets for a rate cut at the December meeting.

Schmid said in October he favored a slower pace of rate reductions given uncertainty about how low the Fed should ultimately bring them.

Schmid also highlighted three challenges the economy is facing. 

A recent run-up in productivity growth could mean the Fed can’t cut rates to levels seen in the past, but it remains to be seen how long the up-tick will last, Schmid said. He also said an aging workforce and a large fiscal debt burden will weigh on the economy. 

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