In the Federal Reserve’s quest to fight inflation, the central bank could overtighten and create more risks for the U.S. economy, warned Vice Chair Lael Brainard.
Speaking at the Clearing House and Bank Policy Institute 2022 Annual Conference in New York on Wednesday, Brainard explained that the institution is committed to reining in the 40-year high inflation that is hurting millions of low-income Americans. This will require more interest rate hikes and keeping the fed funds rate higher for longer, she noted.
But one part of her speech triggered an exceptional rally among the leading benchmark indexes. Brainard warned that the accelerated pace of rate hikes could “create risks associated with overtightening.” …