In the Federal Reserve’s quest to fight inflation, the central bank could overtighten and create more risks for the U.S. economy, Fed Vice Chair Lael Brainard has warned.
Brainard said the institution is committed to reining in the near-40-year-high inflation that is hurting millions of low-income Americans, she said at the Clearing House and Bank Policy Institute 2022 Annual Conference in New York on Sept. 7.
That will require more interest rate increases as well as keeping the fed funds rate higher for longer, she noted.
Brainard warned that the accelerated pace of rate increases could “create risks associated with overtightening,” a comment that triggered an exceptional rally among the leading benchmark indexes….