While Federal Reserve Vice Chair Lael Brainard gave a nod to the role of corporate profiteering in fueling inflation, her core message—that monetary tightening is needed to tackle inflation—drew progressive pushback.
While Federal Reserve Vice Chair Lael Brainard gave a nod to what one observer called"the elephant in the room," her core message—that monetary tightening is needed to tackle inflation—drew progressive pushback.
While attributing high inflation to the ongoing Covid-19 pandemic and Russia's invasion of Ukraine, Brainard—who wasa meeting of the National Association for Business Economics in Chicago—asserted that"there is ample room for margin recompression to help reduce goods inflation" in the retail economy.
"It will take time for the cumulative effect of tighter monetary policy to work through the economy broadly and to bring inflation down," she said."In light of elevated global economic and financial uncertainty, moving forward deliberately and in a data-dependent manner will enable us to learn how economic activity, employment, and inflation are adjusting to cumulative tightening in order to inform our assessments of the path of the policy rate.