The Federal Reserve will begin a “rapid” reduction of its $9tn balance sheet as soon as its next policy meeting in May and is prepared to take “stronger” action when it comes to raising interest rates in order to bring down inflation, a senior US central bank official has said.
Lael Brainard, who sits on the Fed’s board of governors and is awaiting Senate confirmation to become the next vice-chair, said on Tuesday that the central bank’s “most important task” was to moderate the recent rise in consumer prices, which had disproportionately burdened low- and middle-income families.
“It is of paramount importance to get inflation down,” she said in prepared remarks delivered at a conference hosted by the Fed’s Minneapolis branch. “Accordingly, the committee will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”