Inflation will begin to fall in the US for these reasons, according to the vice president of the Fed – El Financiero

US Federal Reserve (Fed) Vice Chair Lael Brainard said on Thursday that recent reports show strong inflation in the US is easing and suggested that accelerating prices may “cool off” without causing significant job losses.

The official outlined a more optimistic outlook for inflation than some Fed speakers have in recent days.

At the same time, Brainard warned that inflation remains high, saying the Fed would have to keep interest rates high “for some time” to slow price growth. He did not explicitly state whether you would support a quarter or half point rate increase at the next Fed meeting, which will be from January 31 to February 1.

Reasons why inflation will fall according to the Fed

Brainard, an influential voice in central bank policy and close to Fed Chairman Jerome Powell, pointed to several trends that she says are would probably reduce inflation in the coming months.

  • The cost of goods like cars, furniture, and clothing has fallen, along with energy prices.
  • There are signs that the job market is cooling off, which could signal minor wage increases. Although a higher wage is good for workers, it can drive inflation if companies seek to offset rising labor costs.

Americans still expect inflation to subside in the coming years, Brainard noted. That is an important measure because if people assume that prices will continue to rise, they will alter their behavior by accelerating their purchases before prices continue to rise. They may also push for higher wages to offset rising costs, thus worsening inflation.

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