Central Banks

Friday, June 21, 2019 - 12:00

MNI POLICY: Fed Brainard: Downside Risks Call For Lower Rates

By Jean Yung

WASHINGTON (MNI) - Federal Reserve Governor Lael Brainard said Friday that it makes sense to lower interest rates when risks shift to the downside in a time when rates are close to zero.

"Crosscurrents from policy uncertainty have risen since early May, crimping business investment plans, raising concerns in some financial market segments, and weighing on global growth prospects," she said in remarks prepared for a Fed conference in Cincinnati.

"Basic principles of risk management in a low neutral rate environment with compressed conventional policy space would argue for softening the expected path of policy when risks shift to the downside."

She remains optimistic that economic growth will continue at a solid pace, but pointed out that recent indicators of inflation and inflation expectations have been disappointing, "making it all the more important to sustain the economy's momentum," she said.

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com


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