Federal Reserve's Lael Brainard speaking on the Economic Outlook and Monetary Policy.
- Says Fed should not hike interest rates until risks to US economy from global weakness diminish
- Outlook for US domestic demand good but risks from abroad mean risks to economy tilted to the downside
- There a risk that underlying momentum of US economy not strong enough to resist deflationary pull from abroad
- Soft landing in China is 'plausible baseline scenario' but china's property, stock market bubbles raise concerns
- Only a modest risk inflation will shoot above 2%, Fed has tools to deal with possible eventuality
- US economy making progress toward full employment, but sluggish wage growth suggests there is some room to go
- Recent payroll gains 'more than sufficient to absorb trend growth in the labor force'
Quick headlines via Reuters, and Bloomberg.
-
A bit of balance in those comments from Brainard, and a repetition of the themes we've been hearing and seeing for a good long time now ... i.e. the labor force is looking good but inflation is well below target.
Given the Fed has their 'dual mandate' it's the lack of inflation, and the risks skewed for lower still, that's holding them back. I'd argue they have a 3rd mandate, financial stability, and its their concerns over the volatility in markets in August and September that also held them back at their most recent meeting.
Others have said the Committee (the FOMC) is a hostage of market volatility. Others have even said the Committee is incapable of making difficult decisions. People can be so unkind. Perhaps not inaccurate, but unkind nevertheless. ;-)
