By Yasin Ebrahim
Invesitng.com -- Federal Reserve Governor Lael Brainard on Thursday backed higher for longer rates, saying policy will need to be “sufficiently restrictive for some time" to ensure inflation returns to the central bank’s target.
“Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis,” Brainard said in remarks prepared for a speech in Chicago.
The Fed vice chair acknowledged that inflation was moderating but said the central bank was “determined to stay the course” at a time when many are betting on the Fed further downshifting to a 25 basis point hike at its meeting next month.
About 67% of traders expect the Fed to lift rates by 0.25% at its February meeting, according to Investing.com's Fed Rate Monitor Tool.
The Fed slowed the pace of rate hikes to 0.5% in December, a move that allowed the central bank to "assess more data as we move the policy rate closer to a sufficiently restrictive level, taking into account the risks around our dual-mandate goals," Brainard added.