Calling high inflation the Federal Reserve's "number one challenge," Vice Chair Lael Brainard on Thursday said she backs at least a couple more half percentage point interest rate hikes, with more on tap if price pressures fail to cool.
"Market pricing for 50 basis points potentially in June and July, from the data we have in hand today, seems like a reasonable path," Brainard told CNBC. September is less clear, she said.
"But if we don't see the kind of deceleration in monthly inflation prints, if we don’t see some of that really hot demand starting to cool a little bit, then it might well be appropriate to have another meeting where we proceed at the same pace."
The U.S. central bank has raised interest rates by three quarters of a percentage point this year, and most Fed policymakers back raising interest rates another half of a percentage point at each of their next two meetings.
Atlanta Fed President Raphael Bostic has suggested that by September the Fed ought to pause to assess the state of the economy before tightening policy further.
Brainard said that's unlikely, and indicated the discussion would be centered only on whether to raise rates by a quarter or half a percentage point that month.
"Right now it's very hard to see the case for a pause," she told CNBC. "We've still got a lot of work to do to get inflation down to our 2% target."
Brainard is typically seen as among the Fed's more dovish members, but in her new role as the Fed's vice chair - she was sworn in last month - her remarks are better seen as conveying the view of the core Fed leadership.
Traders of interest rate futures are currently pricing in better than even odds of a year-end Fed's policy rate in the range of 2.75%-3%, a full two percentage points higher than it is today.
Policymakers next meet in mid-June, and this week is the last where they are free to speak publicly before their regular pre-meeting communications blackout.
"We are certainly going to do what is necessary to bring inflation back down," Brainard said on Thursday. "That’s our number one challenge right now. We are starting from a position of strength, the economy has a lot of momentum."
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