Federal Reserve Governor Lyle Brainard is set to question the US economic outlook on Tuesday and its implications for labor markets, inflation and central bank policies.
Ms. Brainard, who awaits Senate confirmation to serve as the Fed’s vice-chair, will speak in a 35-minute interview starting at 12:10 p.m. Eastern Time as part of The Wall Street Journal Jobs Summit. are the ones. It appears as the central bank is raising interest rates in its most aggressive effort in decades to contain price pressure.
Fed officials indicated they may raise half a percentage point at their meeting early next month and begin trimming their $9 trillion asset portfolio, according to minutes of the Fed’s March 15-16 meeting released last week . Minutes of the meeting followed Ms. Brainard’s remarks last week that bond yields rose amid anticipation of tighter Fed policy this year.
Officials voted in a March meeting to raise rates by a quarter-point, their first rate hike since 2018.
Ms Brainard’s remarks will come hours after the Labor Department reported its March inflation figures.
Fed officials a year ago described high inflation as fleeting. They retreated from that characterization of the previous decline, as the labor market rapidly recovered and price pressures spread to a wider range of goods and, more importantly, labor-intensive services.
Still, as recently as January, the Fed expected inflation to ease this spring as supply-chain constraints improved. The war in Ukraine and renewed lockdowns in China to tackle more contagious forms of the coronavirus have ended any hope of near-term relief from improving supply chains and prompted many Fed officials to accelerate this spring and summer. Inspired to call to speed up.
The central bank is still counting on inflation falling later this year as supply-chain problems ease and more workers return to labor markets. But unlike last year, Fed leaders have said the central bank can no longer set near-term policy by anticipating such relief.
Last week, Ms Brainard said Russia’s invasion of Ukraine was a “seismic geopolitical event” that jolted global commodity supplies, with the potential to further fuel inflation and disrupt global supply chains.
At their meeting last month, Fed officials raised the rate by another 1.5 percentage points this year, which would leave their benchmark rate slightly below 2% by December. Ms Brainard had expected the asset-portfolio runoff to further remove stimulus beyond those projections so that the Fed reaches “a more neutral position later this year”, she said. “The full extent of the additional tightening” thereafter will depend on “how the outlook for inflation and employment develops.”
Fed officials pay close attention to surveys and other measures of consumers and businesses’ expectations of future inflation, because they believe such psychology plays a meaningful role in determining real inflation. Ms Brainard said every indicator of long-term inflation expectations remained in a historical range that was in line with the Fed’s 2% inflation target.
The Fed is “ready to take strong action if indicators of inflation and inflation expectations indicate that such action is warranted,” she said.