Comments from Brainard on the economy
- Italy political developments have introduced some risks to global synchronized growth
- Gradual US rate hikes appropriate
- Alert to emerging risks and will adjust as needed
- Eurozone financial conditions have worsened due to Italian political uncertainty
- Expects US policy to gradually shift to 'modestly beyond neutral'
- Fiscal stimulus and years below inflation target mean gradual rate hikes warranted
- Global downside risks include emerging-market capital flow reversals, US trade policy
- Downplays negative signal from possible yield curve inversion
- FOMC likely needs to adjust stale language around accommodative policy in statement
That last line is a bit of a warning. When that language is changed, it's going to sound more hawkish.
Overall, this was the last major speech before the June FOMC and she did nothing to roll back expectations of a hike. It's a done deal unless there is a major market fit.
