With first-quarter data coming in weak, forestalling an "immediate" rate increase, time for liftoff is getting "clearer," Federal Reserve Board Governor Lael Brainard said Tuesday.
The weak data "raises some questions about the contours of the outlook," she said according to prepared text released by the Fed. Although the possibility exists that the softness was a result of "seasonality and temporary factors it would be difficult, based on the data available today, to dismiss the possibility of a more significant drag on the economy than anticipated from foreign crosscurrents and the negative effects of the oil price decline, along with a more cautious U.S. consumer."
Brainard said the Federal Open Market Committee needs "more time to confirm further improvement in the labor market and firming of inflation toward our 2 percent target. But while the case for liftoff may not be immediate, it is coming into clearer view. When that time comes, the policy path will be highly attuned to incoming data and not on a preset course, and it is important to be mindful of the possibility of volatility as markets adjust to a change in the stance of policy. Thus, the FOMC will continue communicating as clearly as possible regarding the outlook and the factors underlying its policy determinations."
