Fed's Brainard: Getting inflation down is our most important task, welcome to see moderation in core inflation

Fed Vice Chair Lael Brainard said on Tuesday that it is welcome to see some moderation in the rate of core goods inflation and that getting inflation down is the Fed's most important task, reported Reuters. Brainard said that she would be looking to see if we continue to see a moderation in inflation in the months ahead, and that she is most focused on core inflation for assessing the path of monetary policy. 

Russia's invasion of Ukraine is driving the topline of inflation, Brainard stated, pointing to the jump in energy prices in March. The labour market and the economy overall have seen very strong demand, she added, though she said she expects this demand to moderate. Brainard said it is encouraging to see a rebound in the participation rate in the last few months of labour market reports and that the improvement in the participation rate has room to run. 

Additional Remarks:

• There will be spillover from slower growth abroad and less stimulus from the fiscal side. 
• The recovery can be sustained even as we bring inflation down. 
• Fading fiscal support will be a substantial drag this year.
• Financial conditions will bring demand down to more sustainable levels. 
• As the pandemic lifts, we should see more demand for services and less pressure in durables.
• On the supply side, we expect to see continued improvements in labor force participation.
• As we move policy to more neutral levels, I expect to see labor demand coming down.
• There is plenty of room for businesses to reduce the number of job openings.