It soon may be appropriate to slow the pace of increases in the federal funds rate, Lael Brainard, vice chair of the Federal Reserve, said yesterday during an interview with Bloomberg News. The Fed has raised the rate six times this year as it seeks to tame inflation, with the last four increases each raising the rate by 75 basis points. The most recent Consumer Price Index showed that inflation eased in October, but at 7.7% year over year, it was still well above the Fed’s long-term goal of 2%. The Federal Open Market Committee will meet again in December.
The FOMC has already cautioned that it will pursue a more restrictive policy stance until it sees signs inflation is easing, and Brainard reiterated that position in her remarks. Still, she called the October slowdown in inflation encouraging. “I think by moving at a more deliberate pace, we’ll actually be able to see how that cumulative tightening is playing out … As we get into restrictive territory—or further into restricted territory—the risks become more two-sided. And in that environment, it’s really valuable to be able to take into account the data as we go,” she said.