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Fed Is ‘Methodically’ Tightening Policy to Neutral, Brainard Says

  • Fed governor cites combined effect of balance sheet and hikes
  • Says balance sheet decision could come in May, start in June
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Federal Reserve Governor Lael Brainard said the U.S. central bank will move “expeditiously” to raise interest rates to a level that neither stimulates nor slows the economy this year, and spoke confidently about the central bank’s ability to cool off inflation without damaging the labor market.

“We are doing that by tightening monetary policy methodically, and it is through a series of interest rate increases as well as beginning that balance sheet runoff,” Brainard said Tuesday in a live-streamed interview at a Wall Street Journal jobs summit. She said a decision on the balance sheet “could be as soon as May, which would lead to reductions in that balance sheet starting in June.”