Brainard: Fed actions will bring inflation down

Fed Vice Chair nominee Lael Brainard, speaking at a hearing before the Senate Banking Committee on Thursday, said that the Fed’s actions will bring inflation down whilst also allowing the US labour market to make a full recovery. So far in the hearing, Brainard has not been questioned extensively on policy.

The US dollar Index has in recent trade been picking up from earlier session lows and is now in the 94.80 area, having been as low as 94.70 earlier in the day.

Inflation is too high, President Biden’s pick for Fed vice chair says as her nomination hearing begins. Brainard has been nominated to be the new vice chair of the Federal Reserve. Lael Brainard has been nominated to be the new vice chair of the Fed.

Lael Brainard, a Federal Reserve governor who President Biden has nominated to be the central bank’s new vice chair, told lawmakers that the central bank will use its policies to wrestle inflation under control in prepared remarks for her confirmation hearing Thursday. Ms. Brainard, who is facing vetting before the Senate Banking Committee, is likely to garner considerable support among Democrats and may pick up some Republican votes, though how many are unclear at this point.

Her nomination, and her new role at the Fed if the Senate confirms her — comes at a challenging economic moment. Although unemployment is falling rapidly, inflation has taken off, with a report on Wednesday showing that a key price index rose in December at the fastest pace since 1982.

Ms. Brainard also told lawmakers that the Fed’s policies are “focused on getting inflation back down to 2 percent while sustaining a recovery that includes everyone,” calling that the central bank’s “most important task.”

After nearly two years of propping up a virus-stricken economy by keeping interest rates at rock bottom and buying government-backed debt, Fed officials began to slow their large bond purchases late last year. That program is on track to end in March. Officials have signaled in recent weeks that they also expect to lift interest rates to make borrowing more expensive, slowing demand and helping to cool the economy.

Markets increasingly expect four rate increases in 2022, which would put the Fed’s short-term policy interest rate just above 1 percent.

“Today the economy is making welcome progress, but the pandemic continues to pose challenges,” Ms. Brainard said. “Our priority is to protect the gains we have made and support a full recovery.”

Ms. Brainard has been at the Fed since 2014, spanning the Obama, Trump and Biden administrations. Before that, she was a top international official at the Treasury Department. An economist and a Democrat, she had been seen as a potential contender to be Treasury secretary or Fed chair during the Biden administration.

She has a good working relationship with Jerome H. Powell, the Fed chair, who Mr. Biden has renominated for a second term. She used her prepared statement to emphasize that she has worked for many administrations in Washington, Democrats and Republicans alike, while pledging to take the Fed’s mission to fight inflation and its independence from partisan wrangling seriously.