“Temporary” inflation | There is no rush to raise interest rates

France Media Agency

“We must be patient to achieve the goals we set for ourselves,” said Lloyd Brainard during a virtual conference hosted by the Council on Foreign Relations.

“We are committed to maintaining our policy […] Until then, inflation has reached 2% (annual inflation target, editors’ note), but has been on track to surpass 2% for some time, ”she said in detail.

The Fed governor thus addressed many observers, especially in the markets, who believe that the Fed will raise its overnight interest rates – which range from 0 to 0.25% – in anticipation of the expected inflation from spring to spring.

In the trend “a temporary increase in inflation feels more than a permanent change”, Lyle Brainard.

“Even when the economic situation justifies the increase (in rates), the changes must be gradual,” she stressed.

“Property purchases should remain at least at the current rate until we make significant progress to reach our goals,” she clarified.

If inflation is too high and prolonged, she reassures him that “I will not hesitate to act and I think we have the tools” to deal with it, as she recently did as president. From the company, Jerome Powell.

The monetary policy implemented by the Fed makes it possible to achieve near 2% of full employment and inflation.

Inflation is expected to be high from spring onwards, with public assistance and the resumption of economic activity linked to vaccinations beginning in progress, but also due to lower prices compared to March and April 2020.

The Fed said in August that it could withstand a rise in prices above 2% for some time, without raising interest rates immediately, to meet its inflation target. This is due to the slowdown in consumption and the negative impact on employment on the economy.