Fed Vice Chair Says it Will Take ‘Several Months’ of Low Inflation Before Rate Increases are Halted

 NEW YORK–The Federal Reserve’s vice chairman said the Fed will need to see “several months” of low monthly inflation data to be convinced price increases are on the wane and it can stop raising rates.

Lael Brainard

In remarks to the annual conference of the Clearing House and Bank Policy Institute, Lael Brainard made clear the central bank is “in this for as long as it takes to get inflation down.”

Brainard’s comments make it pretty clear that when the Fed meets later this month it will once again push up rates.

During her remarks, Brainard repeatedly stressed the need for American consumers and businesses to believe the Fed is committed to bringing inflation down to its target rate of 2%, after it touched a four-decade high, above 9%, this summer, the New York Times noted in its analysis.

Brainard told the meeting interest rates would “need to rise further” to sufficiently slow demand in the economy to help curb price growth.

Companies Partially to Blame

“Brainard also suggested that corporate decision making was partly to blame for rising prices,” the Times reported. “She said that high profit margins in some industries, including retail and automotive, suggested companies could be using market power to raise prices — and that reducing those markups could make an important contribution to reduced inflation pressures in consumer goods.”

Brainard said there have recently been some encouraging trends for prices, including falling gasoline prices; improved delivery times for some goods that had been snarled in global supply chains; and rising labor force participation, particularly among working-age women. She said it was possible that current trends suggested the Fed could slow the economy without pushing up unemployment, as is typically the case, though she added that it was too soon to tell, the Times report added.