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US’s Federal Governor said that Rate hike case ‘not convincing’

Fed governor

welcome By: Elena Grace Flores

The United States’s economy  is not doing well now. Aside from the upcoming election, there’s also inflation. As laws are examined to do good than bad, someone has to say no. Here’s Abs-Cbn’s news:

Governor Lael Brainard’s Analysis

WASHINGTON – The case for raising US interest rates remains less than convincing. Given the weak inflation and current under-employment levels. This is the view of influential Federal Reserve Board Governor Lael Brainard said Monday.
The remarks come a week before US policymakers are due to review interest rate policy. Markets are lingering in uncertainty as to whether the Fed will resume a course of rate hikes it had embarked on in December.

Less Compelling Strategy

“To the extent that the effect on inflation of further gradual tightening in labor market conditions is likely to be moderate and gradual. The case to tighten policy preemptively is less compelling,” Brainard said in remarks at the Chicago Council on Global Affairs. Brainard has been a consistent voice for postponing increases in interest rates in favor of allowing job creation.
Her remarks stood in contrast to more hawkish members of the Federal Open Markets Committee who say they fear inflation and an overheating economy. The FOMC was divided in June on the timing of the next rate increase.

Lively Discussion

Earlier on Monday, Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said policymakers were due for a “lively discussion” when they meet next week, but he did not pronounce on likely actions by the Fed this year.
Brainard said the conventional link between inflation and unemployment had not held as labor markets had strengthened over the past four years.
“At a time when the unemployment rate has fallen from 8.2 percent to 4.9 percent, inflation has undershot our 2 percent target now for 51 straight months,” she said.

cent to 4.9 percent, inflation has undershot our 2 percent target now for 51 straight months,” she said.
She also said that the current unemployment rate had not budged despite recently despite steady job growth of an average of about 180,000 new positions per month, suggesting that labor markets still had significant slack.

International economic conditions also argued in favor of caution, said Brainard, noting that weak growth and low inflation in Europe. Japan, as well as the instability in China could impinge on the US economy.
“Recent experience suggests global financial markets are tightly integrated, such that disturbances emanating from Chinese or euro-area financial markets quickly spill over to US financial markets,” she said.

On Friday US equity markets lost more than two percent in reaction to more hawkish remarks from Boston Fed President Eric Rosengren.
However, stocks did not appear directly influenced by Brainard’s remarks on Monday. Toward 1800 GMT, while the S&P 500 was up 0.9 percent.


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