US FOMC Member Brainard Speaks

BRAINARD: PROBABLY BE APPROPRIATE "SOON" TO MOVE TO A SLOWER PACE OF INCREASES #News #Markets #capitalhungry FED'S BRAINARD: LATEST CPI FIGURES SIGN TO A REDUCTION IN THE CORE PCE FED'S BRAINARD: CORE INFLATION REMAINS STRONG FED'S BRAINARD: STARTED TO SEE WAGE MEASURES SETTING DOWN FED'S BRAINARD: APPROPRIATE TO MOVE TO A SLOWER PACE OF INCREASES Fed’s Brainard: Most Recent CPI Data Suggests Core PCE Measure Could Also Show Reduction - BBG TV - Within Core, Finally Starting To See Goods Inflation Turn - Inflation Data Was Reassuring Preliminarily - Starting To See Wage Series Step Down, But ‘Will Take Time’ FED'S BRAINARD: THE FLOW OF DATA WILL INFORM PEAK RATE QUESTIONS. EVEN FOR THE DECEMBER MEETING, MORE INFORMATION WILL BE RECEIVED. Fed's Brainard: - Actions of the Fed can be seen in financial conditions and inflation expectations - Because cumulative policy takes time to work its way through, it is logical to be cautious #FOMC

Over the past year, inflation has been very high in the United States and around the world (figure 1). High inflation imposes costs on all households, and especially low-income households. The multiple waves of the pandemic, combined with Russia's war against Ukraine, unleashed a series of supply shocks hitting goods, labor, and commodities that, in combination with strong demand, have contributed to ongoing high inflation. With a series of inflationary supply shocks, it is especially important to guard against the risk that households and businesses could start to expect inflation to remain above 2 percent in the longer run, which would make it much more challenging to bring inflation back down to our target. The Federal Reserve is taking action to keep inflation expectations anchored and bring inflation back to 2 percent over time.1 While last year's rapid pace of economic growth was boosted by accommodative fiscal and monetary policy as well as reopening, demand has moderated this year as those tailwinds have abated. A sizable fiscal drag on output growth alongside a sharp tightening in financial conditions has contributed to a slowing in activity. In the first half of 2022, real gross domestic product (GDP) declined outright, overall real consumer spending grew at just one-fourth of its 2021 pace, and residential investment, a particularly interest-sensitive sector, declined by 8 percent (figure 2).2 The concentration of strong consumer spending in supply-constrained sectors has contributed to high inflation. Consumer spending is in the midst of an ongoing but still incomplete rotation back toward pre-pandemic patterns. Real spending on goods has declined modestly in each of the past two quarters, while real spending on services has expanded at about half its 2021 growth rate. Even so, the level of goods spending remains 5 percent above the level implied by its pre-pandemic trend, while services spending remains 4 percent below its t *BRAINARD SAYS RISKS WILL BECOME MORE TWO-SIDED `AT SOME POINT’ *BRAINARD: FED IN IT FOR `AS LONG AS IT TAKES’ TO CURB INFLATION BRAINARD: MONETARY POLICY WILL NEED TO BE RESTRICTIVE 'FOR SOME TIME' BRAINARD: OUR RESOLVE IS FIRM, GOALS CLEAR, TOOLS 'UP TO THE TASK' BRAINARD: NEED 'SEVERAL MONTHS OF LOW MONTHLY INFLATION READINGS' TO BE CONFIDENT INFLATION IS MOVING DOWN TO 2% BRAINARD: HIGHER POLICY RATE, BALANCE SHEET REDUCTION SHOULD HELP BRING DEMAND INTO ALIGNMENT WITH SUPPLY BRAINARD: ESPECIALLY IMPORTANT TO GUARD AGAINST RISE IN INFLATION EXPECTATIONS