Update | Fed’s Brainard warns against rush to raise US interest rates
Market analysts lower estimate of rate rise in Fed’s September 20-21 meeting
US interest rate futures prices rose on Monday, diminishing the implied probability of a rate hike by the US central bank next week, after Federal Reserve Governor Lael Brainard warned against a rush to raise interest rates.
The comments from Brainard had been highly anticipated through the day as she will be among the last Fed officials to speak before they enter their quiet period ahead of their next policy meeting on September 20-21.
Some analysts raised the probability Brainard, who is known for her easy policy stance, would use Monday’s speech to hint the central bank would raise interest rates next week from its current target range of 0.25-0.50 per cent.
“This hypothesis always struck me as preposterous,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a research note. “She spins any fact, positive or negative, as a reason to stay easy.”
In her speech to the Chicago Council on Global Affairs, Brainard cautioned against raising interest rates too quickly due to potential weakness in the labour market and risks of economic weakness overseas.