Lael Brainard, Interview: Bloomberg Markets

Fed Funds

“I think it will probably be appropriate soon to move to a slower pace of increases, but I think what’s really important to emphasize, we’ve done a lot, but we have additional work to do both on raising rates and sustaining restraint to bring inflation down to 2% over time … it makes sense to move to a more deliberate and a more data dependent pace as we continue to make sure that there’s restraint that will bring inflation down over time.”

“These are issues that are questions that are very much going to be informed by the flow of data. Even for just the December meetings decision, we still will have additional data in hand by the time that members of the committee will be submitting their new projections … we do have additional work to do on raising rates and that by moving forward at a pace that’s more deliberate, we’ll be able to assess more data and be better able to adjust the path of rates to bring inflation down.”

Terminal Rate and Overtightening

“I think what we talked about in the last meeting, which is taking into account the cumulative amount of tightening that is in place and the lags with which tightening and financial conditions flows through to activity and to inflation. I think by moving at a more deliberate pace, we’ll actually be able to see how that cumulative tightening is playing out and how much additional tightening … As we get into restrictive territory or further into restrictive territory, risks become more two-sided and in that environment it’s really valuable to be able to take into account the data as we go. So that should enable us to move to a restrictive level that is appropriate for bringing inflation down over some period of time. So exactly what that path looks like I think is really hard to say right now.”