March 28, 2024

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Appropriate for the Fed to start raising rates in March: Brainard

Appropriate for the Fed to start raising rates in March: Brainard

Bloomberg – Federal Reserve Governor Lael Brainard said the US central bank is ready to raise interest rates next month and begin reducing its balance sheet at upcoming meetings.

Given that we saw some very strong data, I expect that in our next meeting it will be appropriate to embark on a series of rate hikes.Brainard said Friday during a panel discussion at a conference in New York.

The current recovery is much stronger and faster than in the last cycle. So I think it would be appropriate to start the increases in the next few meetings.The official nominated by President Joe Biden for Fed Vice President added (and Senate confirmation is pending).

During their January 25-26 meeting, Fed officials concluded that they would soon start raising interest rates, which are close to zero, and that they were on alert for persistent inflation that would ensure a faster pace of tightening, according to the meeting minutes. The session was published on Wednesday.

Federal Reserve Chairman Jerome Powell told reporters after the meeting that officials tended to move in March to deal with the biggest price increases in 40 years, and agreed to begin shrinking the Fed’s massive 8.9 trillion balance. Investors expect the Fed to tighten monetary policy by about 150 basis points this year.

Raising interest rates and shrinking the balance sheet “will bring down inflation over time,” Brainard said.

“The market is in line with that,” he said, adding that this has moved into the real economy through changes in mortgage and loan rates, while credit conditions for loans have been tightened. “So we’ve already seen the kind of adjustment that households and businesses are facing, which is in line with the outlook for the economy.Brainard added.

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