Brainard warns US rates to stay high, notes global impact

WASHINGTON — Federal Reserve Vice Chair Lael Brainard said Friday that U.S. interest rates will likely have to remain high for an extended period to combat inflation,In remarks at a conference hosted by the Federal Reserve Bank of New York, Brainard said that international turmoil still threatens to disrupt global supplies of commodities and manufactured parts, a key factor pushing inflation higher.

Interest rates will need to stay high “for some time to have confidence that inflation is moving back” to the Fed's 2% target, Brainard said. “For these reasons, we are committed to avoiding pulling back prematurely.”that the inflation gauge the Fed prefers rose 0.3% in August from July, while excluding the volatile food and energy categories, core prices jumped 0.6%, more than most economists forecast.

In her remarks, Brainard acknowledged that the Fed's moves affect other economies overseas. Higher interest rates in the U.S. push up the value of the dollar, for example, and slow the domestic economy, both of which reduce the amount of goods Americans buy from overseas.Her remarks followed widespread disruptions in financial markets in the past week after newly-installed U.K.

Other officials this week have also emphasized that the Fed has to keep pushing rates higher to counter inflation.

Remember that Trump demanded the Fed lower rates to juice the economy to get him re-elected. As such, the Fed did not perform the rate hikes needed in the Trump term. Sadly, now Biden gets blamed for allowing the Fed to function.

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