Fed’s Brainard says spike in inflation this year is ‘transitory’

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Federal Reserve Board Governor Lael Brainard on Monday laid out a strong case for the central bank to maintain low interest rates, saying that the spike seen in inflation this year was transitory and the labor market was far from healed. Brainard pushed back on some of her hawkish colleagues at the central bank, who are pressing the Fed to end its support for the economy in the form of bond purchases by the middle of next year in case the central bank needs to raise its short-term interest rates to cool off inflation. In a speech to the National Association for Business Economics, Brainard said the spike in inflation seen this year was narrow and caused categories damaged by COVID disruptions. “High inflation readings from the spring and early summer were disproportionately driven by a few sectors experiencing specific supply bottlenecks,” Brainard said. “As those COVID related disruptions subside, most forecasters expect inflation
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