Economic data since the U.S. central bank's last meeting in December have showed inflation continuing to wane, with consumer and producer prices, profits, and wages all growing more slowly, and major inflation drivers like rent hardwired to move down.
After last year's rapid rate increases, "now we're in an environment where we're balancing risks on both sides,"during an event at the University of Chicago's Booth School of Business, even as she avoided, as the Fed's second-ranking official, voicing an explicit policy preference for the upcoming meeting.
"Inflation is high, and it will take time and resolve to get it back down to 2%. We are determined to stay the course," Brainard said.The message of an unremitting battle against inflation has become a consensus mantra among the Fed's 19 policymakers, but one they may be challenged to sustain if evidence continues to mount that the economy is slowing.
Officials will not issue new projections at the upcoming meeting, so any shift in emphasis would need to come through the policy statement, which will be released at 2 p.m. EST on Feb. 1. Powell will start speaking half an hour later. Fed officials were surprised in 2021 by the persistence of inflation that at one point was more than triple their 2% target. They spent last year trying to catch up by raising interest rates, and now seem biased in favor of doing too much to restrain the pace of prices rather than doing too little out of fear of damaging the jobs market and economic growth.
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