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Below are the key highlights from the Fed Governor Lael  Brainard’s recently delivered prepared remarks.

  • Italy political developments have reintroduced some risk to synchronized global growth.
  • Gradual U.S. rate hikes appropriate; alert to emerging risks and ready to adjust as needed.
  • Euro area financial conditions have worsened due to Italy political uncertainty.
  • I expect U.S. policy to gradually shift to ‘modestly beyond neutral’ setting.
  • Longer-run neutral policy rate likely to remain historically low even if it rises in shorter term.
  • U.S. fiscal stimulus, years below inflation target mean gradual rate hikes warranted.
  • A challenge to set policy in face of sizeable fiscal stimulus.
  • Global downside risks include emerging-market capital-flow reversals, U.S. trade policy.
  • Major global central banks likely to remain on divergent policy paths for some time.
  • Downplays negative signal from any possible yield-curve inversion.
  • FOMC likely needs to adjust ‘stale’ language around accommodative policy in statement.