Federal Reserve vice chair Brainard

Fed's Vice Chair Brainard:

  • Higher interest rates are working to temper demand and bring it into better alignment with supply, which is still constrained.
  • Output has decelerated so far this year by more than anticipated, suggesting that policy tightening is having some effect.
  • the stock of excess savings held by households is about 25 percent lower, which may imply a more subdued pace of consumer spending going forward than had been projected.
  • Monetary policy will be restrictive for some time
  • It will take time for cumulative tightening to bring inflation down
  • Concurrently global tightening to reinforce moderation of demand
  • Fed is attentive to risks for further adverse shocks
  • Fed is very aware that unexpected interest rate or currency moves could interact with financial vulnerabilities
  • Fed should move forward deliberately to assess how economy, employment, inflation are adjusting; to inform path of policy rate
  • See limited 2H GDP rebound, GDP growth flat this year
  • Seeing tentative signs of labor market rebalancing
  • Strong wage growth, high rental costs mean inflation from core services expected to ease only slightly.

For the FULL TEXT of her speech CLICK HERE

The less hawkish tones have stocks off their lows. The major indices are still lower on the day. The major indices are working on the 4th consecutive down day:

  • Dow is down -135 points or -0.47% at 29161
  • S&P is down -32.70 points ro 0.87% at 3608.00
  • Nasdaq is down -115.0 points or -1.05% at 10540.

The Fed still has 4.5% for the end of the year and 4.75% as the terminal rate in early 2023. What happens from there is up in the air.

The dollar is coming off highs as well.