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Fed’s Brainard Is Monitoring Market Developments ‘Very Closely’

U.S stocks fell as China responded to Trump’s tariff threat by letting the yuan fall to the weakest in more than a decade.

Fed’s Brainard Is Monitoring Market Developments ‘Very Closely’
Lael Brainard, governor of the U.S. Federal Reserve, speaks during the Monetary Policy Strategy, Tools, and Communication Practices Conference in Chicago, Illinois, U.S. (Photographer: Taylor Glascock/Bloomberg)

(Bloomberg) --

Federal Reserve Governor Lael Brainard said she is closely watching financial markets and added that the central bank aims to keep the U.S. economic expansion on track.

“I am certainly monitoring developments very closely,” she said at a Kansas City Fed event Monday in response to an audience question on U.S. stocks. “We’re committed to sustaining the expansion and I’m certainly monitoring developments for their implications for the outlook and I’ll continue to be very attentive to them,” she said.

Fed’s Brainard Is Monitoring Market Developments ‘Very Closely’

U.S. stocks plunged Monday after China responded to President Donald Trump’s tariff threat by letting the yuan fall to the weakest in more than a decade and asking state-owned companies to suspend imports of U.S. agricultural products.

The S&P 500 headed for its biggest drop in more than a year as the Dow Jones Industrial Average tumbled as much as 895 points. The 10 year Treasury yield fell as low as 1.73, close to completely erasing the surge that followed Trump’s 2016 election.

Brainard spoke alongside Kansas City Fed President Esther George who cautioned that markets “move quickly.”

“It takes some time to see how that evolves and so the best I think that you can do right now is just to monitor and see how that unfolds,” said George, who dissented last week against the Fed’s first interest-rate cut in a decade.

She said in statement on Friday that the U.S. economic outlook faces risks from trade policy uncertainty and weaker global growth. “Should incoming data point to a weakening economy, I would be prepared to adjust policy consistent with the Federal Reserve’s mandates for maximum sustainable employment and stable prices,” George said.

To contact the reporter on this story: Alister Bull in Washington at abull7@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Jeff Kearns

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