Fed’s Brainard: Fed should consider capping Treasury bond rates in next crisis

The Federal Reserve should consider capping Treasury bond rates in the next economic crisis  rather than relying on the sort of quantitative easing programs used last time,  Fed Governor Lael Brainard argued  in prepared remarks for a speech to the New York Association of Business Economics on Tuesday.

“Shifting the Fed’s target to communicate an average of 2% over time would be simpler than stricter rules that commit to an outcome,” Brainard said regarding the Fed’s inflation target and noted that she was concerned about trend inflation slipping below 2%.

The US Dollar Index largely ignored these comments and remains flat on the day near the 98.30 mark.

“Risks to economic outlook remain to the downside but sentiment appears to be improving,” Brainard further noted. “Will be watching data carefully for signs of a material  change in the outlook that may require further policy changes.”