Fed Vice Chair Brainard stated that it might 'soon' be possible to move to a slower speed of rate hikes

November 16, 2022: -On Monday, Federal Reserve Vice Chair Lael Brainard stated that the central bank could slow the speed of its interest rate increases.

With markets expecting a reasonable step down in December from the Fed’s rapid speed of rate increases in 2022, Brainard later approved that a slowdown, if not a stop, is looming.

“I think it will be appropriate soon to transfer to a slower speed of rate increases,” she noted Bloomberg News in a live interview.

That doesn’t mean the Fed will stop increasing rates. Still, it at least will come off a speed that has seen four consecutive 0.75 percentage point increases, an unusual pattern since the central bank began to use short-term rates to apply the monetary policy in 1990.

“I think what’s important to emphasize is we have done a lot, but we have further work to do both on increasing rates and sustaining restraint to take inflation down to 2% more time,” Brainard added.

Brainard spoke a week following the Fed took its benchmark interest prices to a 3.75%-4% targeted area, the highest level in 14 years. According to the Bureau of Labour Statistics, the Fed has been battling inflation, increasing since the early 1980s and continuing at a 7.7% annual pace in October.

The consumer price index rose 0.4% in the previous month, less than the Dow Jones estimate of 0.6%, and Brainard said she had seen signs that inflation is cooling.

“We have increased rates very rapidly, and we’ve been decreasing the balance sheet, and you can notice that in financial conditions, you can experience that in inflation anticipation, which is quite well-anchored,” she added.

Along with the rate surging, the Fed has been decreasing the bond holdings on its balance sheet at a high speed of $95 billion a month. Since that process, nicknamed “quantitative tightening,” started in June and Fed’s balance sheet has acquired over $235 billion but stays at $8.73 trillion.