Brainard Says Fed ‘Committed’ to Sustaining 2 Percent Inflation

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Federal Reserve Governor Lael Brainard said U.S. central bankers are committed to sustaining their 2 percent inflation target, helping explain why officials foresee no interest rate increases this year.

“We are extremely focused at the Federal Reserve on ensuring that inflation stays anchored at 2 percent,” Brainard said in an interview Thursday with Bloomberg Television’s Tom Keene. Noting the Fed’s recent pivot to a “pause” on rates and very flat projections for future hikes, “that is all a recognition that we are very committed to achieving and sustaining that 2 percent core” inflation goal, she said.

Officials in March forecast no rate increase this year and just one in 2020, according to their median estimate, amid risks from weaker growth abroad that has cooled the U.S. economy. The Fed’s preferred gauge of price pressures, the personal consumption expenditures price index, has averaged 1.5 percent since the U.S. expansion began June 2009, while the core measure, minus food and energy, has averaged 1.6 percent.

Brainard said lifting the inflation rate back to target is “a big concern of mine and it’s going to continue to be.’’

Fed officials left rates unchanged at their March 19-20 meeting. A record of that gathering released Wednesday showed policy makers grappling with a variety of domestic and international risks, as well as an inflation rate that has been less responsive to above-trend growth and low unemployment.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net

To contact the editors responsible for this story: Alister Bull at abull7@bloomberg.net, Brendan Murray

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