Fed governor Brainard says risks to US economy argue for ‘softer’ rate path
Federal Reserve should downgrade expectations for rate hikes even if its economic forecasts have not changed
New York — A weakening economic outlook in the US and abroad argues for a “softer” path for interest rates than central bankers previously envisioned, Federal Reserve governor Lael Brainard said on Thursday. “Modest downward revisions to the baseline outlook for output and employment would call for modest downward revisions to the path for our conventional policy tool, the federal funds rate, helping to offset some of the weakness that would otherwise weigh on the economy,” Brainard said in remarks prepared for a speech in Princeton, New Jersey. “Moreover, basic principles of risk management would suggest that the increase in downside risks warrants a modest downward revision to the modal path for policy,” she said. Fed officials have signalled they are undecided about whether they will continue raising rates this year after a quarter-point increase in December. At the time, they expected two hikes would be appropriate in 2019, according to the median policymaker’s estimate, but ens...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.