Fed's Brainard: FOMC needs to adjust 'stale' language around accommodative policy in statement
|Below are the key highlights from the Fed Governor Lael Brainard's recently delivered prepared remarks.
- Italy political developments have reintroduced some risk to synchronized global growth.
- Gradual U.S. rate hikes appropriate; alert to emerging risks and ready to adjust as needed.
- Euro area financial conditions have worsened due to Italy political uncertainty.
- I expect U.S. policy to gradually shift to 'modestly beyond neutral' setting.
- Longer-run neutral policy rate likely to remain historically low even if it rises in shorter term.
- U.S. fiscal stimulus, years below inflation target mean gradual rate hikes warranted.
- A challenge to set policy in face of sizeable fiscal stimulus.
- Global downside risks include emerging-market capital-flow reversals, U.S. trade policy.
- Major global central banks likely to remain on divergent policy paths for some time.
- Downplays negative signal from any possible yield-curve inversion.
- FOMC likely needs to adjust 'stale' language around accommodative policy in statement.
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