Federal Reserve Deputy Chief of Staff Lael Brainard said on Thursday that it is unlikely that the central bank will take a break from its current rate hike cycle soon.
Although she stressed that the Fed’s decision makers will remain computer dependent, Brainard said the most likely path will be that the increases will continue until inflation is tamed.
“Right now it’s very difficult to see the case for a break,”[ads1]; she told CNBC’s Sara Eisen during a live “Squawk on the Street” interview. “We still have a lot of work to do to bring inflation down to our 2% target.”
The idea of implementing two more 50 basis point rate hikes over the summer, and then taking a step back in September, has been put forward by a few officials, particularly Atlanta Fed President Raphael Bostic. Minutes from the May meeting indicated some support for the idea of evaluating where things stand in the autumn, but there were no commitments.
In recent days, policy makers including San Francisco Fed President Mary Daly and Governor Christopher Waller have stressed the importance of using the central bank’s policy tools aggressively to bring down inflation, which has been at its fastest pace since the early 1980s.
“We are definitely going to do what is necessary to bring inflation down again,” Brainard said. “It is our No. 1 challenge right now. We are starting from a position of strength. The economy is gaining momentum.”
The markets are already pricing in two increases of 50 basis points at the next meetings, which Brainard called “a reasonable way.” But beyond that, “it’s a little hard to say,” she added.
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