Reply To: Fed Vice Chair Brainard Talks on Bringing Inflation Down

Helmholtz Watson

More Brainard:

Tuesday, 12/04/2022 in an interview with the WSJ and says:

Russia’s invasion of Ukraine driving topline inflation, especially energy
Most focused-on core inflation for assessing the path of monetary policy
Welcome to see moderation in core goods inflation
I will be looking to see if we continue to see moderation in inflation in months ahead
Labor market and economy overall has been very strong demand
Getting inflation down our most important task
Encouraging in last few months of employment reports is we are seeing a rebound in participation rate
Room to run on participation rate
I expect demand to moderate
There will be spillover from slower growth abroad, less stimulus from fiscal side
Recovery can be sustained even as we bring inflation down
Fiscal support will be a substantial drag this year
On supply side, we expect to see continued improvement in labor force participation
Plenty of room for businesses to reduce number of job openings
I don’t see Fed tightening policy as not being consistent with bringing inflation down and sustaining recovery
Russia’s invasion is a risk to upside inflation, downside on economic activity
The longer the war persists, the greater the potential the risks to upside on inflation, and downside on growth
China’s zero Covid policy has potential to lengthen out supply chain constraints
China is just another set of inflationary shock that is hitting the economy
It is too early to have great confidence in what post pandemic, war new normal will be for US economy
We need to see how economy evolves
Fed is committed to bring inflation back to art 2% goal
We are committed to keeping inflation expectations are anchored
It will take more time than anybody would have thought for employment to go back to pre-Pandemic norms
Reductions in balance sheet could come as soon at June after the decision made in May