Fed Governor Lael Brainard said in a speech that the FOMC’s current approach implies “resolute patience while the gap closes between current conditions and the maximum-employment and average inflation outcomes in the guidance.”
The “preemptive approach” calls for reduction of accommodation when unemployment rate nears the estimated neutral rate, in anticipation of higher inflation risks. But the current “patient” approach enables “the labor market to continue to improve and inflation expectations to become re-anchored at 2 percent.”
While outlook has “brightened considerably”, the economy remains “far from our goals” with jobs nearly 10 million below pre-COVID level, and inflation persistently below 2%. “It will take some time to achieve substantial further progress,” she added.
