June 2 (Reuters) – U.S. Federal Reserve (Fed) Vice Chair Lael Brainard said on Thursday she supports interest rate hikes of at least half a point this month and in July, or even more over the following months if inflation, which she describes as “challenge number one”, does not subside.
“Market expectations for a likely 50 basis point rally in June and July, given the data we have today, seems like a reasonable trajectory,” she told CNBC. September is less clear, she added.
“But if we don’t see a deceleration in the monthly inflation numbers, if we don’t see some of that really high (price) upside starting to subside a bit, then it might just be opportune to have another meeting where we will proceed (to increases) at the same pace,” she explained.
Since the beginning of the year, the Federal Reserve has raised its rates by a total of three quarters of a point and most of the institution’s officials support an increase in the cost of credit of half a percentage point at each of the two upcoming Fed meetings.
“Right now, it is very difficult to envisage a pause,” continued Lael Brainard, as the markets hope for a temporary interruption in monetary tightening in September so as not to plunge the economy into recession.
“We still have a lot of work to do to bring inflation back to our 2% target,” she said.
“We will certainly do what is necessary to bring down inflation,” she assured, adding: “That is our number one challenge at the moment. We are starting from a position of strength, the economy has a lot of dynamism.” (Report Ann Saphir and Lindsay Dunsmuir; French version Claude Chendjou, edited by Sophie Louet)