Fed’s Brainard Backs Balance-Sheet Runoff ‘Soon,’ Wary on Rates

Federal Reserve Governor Lael Brainard sounded a note of caution over further interest-rate increases while signaling she’s comfortable with pressing ahead “soon” with plans to start shrinking the central bank’s $4.5 trillion balance sheet.

“I will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target,” Brainard said in the text of a speech she’ll deliver Tuesday in New York.

Brainard said the Fed’s policy rate — currently in a target range of 1 percent to 1.25 percent — was not far from its neutral level that would neither stimulate nor hold back economic growth.

“The neutral level of the federal funds rate is likely to remain close to zero in real terms over the medium term,” she said. “If that is the case, we would not have much more



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