The Federal Reserve is likely to leave interest rates steady after a senior Fed official said it should avoid removing support for the US economy too quickly.
In comments Monday, Fed governor Lael Brainard solidified the view the central bank would leave interest rates unchanged next week, Reuters reports.
Brainard wants to see a stronger trend in US consumer spending and evidence of rising inflation before the Fed raises interest rates, and that the United States still looked vulnerable to economic weakness abroad.
“Today’s new normal counsels prudence in the removal of policy accommodation,” Brainard, one of six permanent voters on the Fed’s rate-setting committee, told the Chicago Council on Global Affairs.
She said the US labor market was not yet at full strength, which means “the case to tighten policy preemptively is less compelling.”
Brainard did not comment on the specific timing of future rate policy changes but she held firm in arguing for caution in what could be the last word from a Fed policymaker before the central bank’s Sept. 20-21 meeting.
Policymakers will go into the meeting divided, with some concerned current low rates will fuel a surge in inflation while another camp, which includes Brainard, has argued that the Fed should not rush to raise rates.
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