Lael Brainard

The Fed vice chair expects “significant weakening in the industrial sector” in the coming year.

(Photo: Bloomberg)

Washington Given the receding risk of recession, the US Federal Reserve will remain on track to raise interest rates, according to its vice president, Lael Brainard. The chances of a soft landing of the economy apparently increased, said the deputy of fed-President Jerome Powell Thursday at an event at Chicago’s Booth School of Business. A recession could possibly be avoided.

In the scenario she outlines, it is therefore possible that the inflation is pressed without associated large indentation of jobs. However, the data points to moderate economic growth this year.. Brainard cited a “considerable weakening of the industrial sector” and constrained consumption. Even if the fed first you will have to analyze the progress you have made in the fight against inflation if you want to “stay the course”.

Although inflation has weakened recently, it remains high. According to Brainard, monetary policy must therefore remain tight enough for some time so that the long-term target of a 2.0 percent inflation rate can be achieved. “We are still exploring the sufficiently restrictive level,” he added. The logic behind the December policy decision to go for smaller rate hikes is still “very applicable” today, he said in a question-and-answer session.

Peak interest rate in sight?

Brainard’s speech was well received on Wall Street. The Dow Jones standard stock index, the broadest S&P According to the statements, 500.SPX and the Nasdaq tech stock index were each around half a percentage point in the red. Previously, each had lost about 1 percent on recession fears according to new economic figures.

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The financial markets have the still fairly stable Economy and the fading wave of inflation means the Fed will only raise the key interest rate by a quarter of a percentage point in early February. The key monetary policy rate has been in the 4.25 to 4.50 percent range since the half percentage point increase in December.

US currency regulator Susan Collins is also calling for the pace of interest rate hikes to be slowed. After the aggressive pace of the previous year, a more moderate approach is now appropriate. She places the interest rate spike “just above” the five percent mark. After that, this level should be maintained for some time, said the head of the Boston Federal Reserve District.

More: Lagarde is pushing for more significant rate hikes and warns investors

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