Financial Associated Press, November 15 (Editor Shi Zhengcheng)On Monday afternoon local time, Fed Vice Chairman Lael Brainard attended a media event and became another Fed official to signal that the Fed slowed down the pace of interest rate hikes.
Earlier this month, the Federal Reserve raised interest rates by 75 basis points for the fourth time in a row, and the range of the federal funds rate has reached 3.75%-4%. As the expected peak interest rate is getting closer and closer, it coincides with the unexpected drop in the CPI data last week. At present, the entire market is eagerly waiting for any signal about slowing down or even stopping interest rate hikes.
As a dovish official, Brainard’s remarks on Monday did not deviate from her usual rhetoric, but the market likes to hear this kind of news. After the vice chairman of the Federal Reserve made a speech, the US stock market rose rapidly, and the S&P and the Dow turned red in a short time.
What did the second-in-command of the Fed say?
In his speech on Monday, Brainard emphasized: “It may be appropriate to slow rate hikes in the short term. But I think what really needs to be emphasized is that the Fed has done a lot, but there is still more to be done.”
Brainard further explained,There may be a lag in the effects of Fed rate hikes, so it may take some time for the accumulated tightening to spread through the economy. By taking a more cautious and data-dependent pace, the Fed can assess more data to better judge the path of future rate hikes.
Contrary to the stock market’s intuition, the Fed vice chair sees labor market resilience as a good thing. She believes that adding more workers to the labor force will effectively improve the imbalance between supply and demand. From the Fed’s point of view, if supply and demand have been out of balance, it is clear that there needs to be constraints on the demand side so that demand aligns with reduced supply.
Similar to Powell, Brainard will dodge some key issues. Asked about peak rates, Brainard said,The peak interest rate needs to be determined by a series of data. Even before the FOMC meeting in December this year, there will be some new data. Brainard also declined to say whether her own peak rate expectations have changed.
According to the schedule, the Fed’s last FOMC meeting of the year will be held on December 14-15, and the latest economic forecasts will also be released at that time.