Rate hike case ‘less compelling’: Fed governor

Washington (AFP) – The case for raising US interest rates remains less than convincing, given weak inflation and current under-employment levels, influential Federal Reserve Board Governor Lael Brainard said Monday.

The remarks come a week before US policymakers are due to review interest rate policy, with markets lingering in uncertainty as to whether the Fed will resume a course of rate hikes it had embarked on in December.

“To the extent that the effect on inflation of further gradual tightening in labor market conditions is likely to be moderate and gradual, the case to tighten policy preemptively is less compelling,” Brainard said in remarks at the Chicago Council on Global Affairs.

Brainard has been a consistent voice for postponing increases in interest rates in favor of allowing job creation.

Her remarks stood in contrast to more hawkish members of the Federal Open Markets Committee who say they fear inflation and an overheating economy.

Earlier on Monday, Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said policymakers were due for a “lively discussion” when they meet next week, but did not pronounce on likely actions by the Fed this year.