Fed Vice Chair Indicates It May Be Time to Slow Rate Increases

11/15/2022 

WASHINGTON–The Federal Reserve’s vice chair is indicating it may be time to begin slowing the pace of interest rate increases.

Lael Brainard

Vice Chair Lael Brainard said that with markets now expecting the Fed, when it meets again in December, to pull back from the rapid pace of rate increases in 2022, she favors the  slowdown.

"I think it will probably be appropriate soon to move to a slower pace of rate increases," she told Bloomberg News.

That doesn't mean the Fed will stop raising rates, but it at least will come off a pace that has seen four consecutive 0.75 percentage point increases, an unprecedented pattern since the central bank started using short-term rates to set monetary policy in 1990, noted CNBC.

"I think what's really important to emphasize is 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," Brainard told Bloomberg.

‘Quite Well-Anchored’

Brainard’s comments came one week after the Fed took its benchmark interest rate to a 3.75%-4% targeted range, the highest level in 14 years, as it seeks to fight back inflation, which continued at a 7.7% annual pace in October, according to the Bureau of Labor Statistics.

"We have raised rates very rapidly ... and we've been reducing the balance sheet, and you can see that in financial conditions, you can see that in inflation expectations, which are quite well-anchored," added Brainard.