At least one member of the Federal Reserve’s monetary policy committee thinks that delaying further interest rate increases would be a smart move.
Fed governor Lael Brainard said Friday in a speech in Washington that “there would appear to be an advantage to waiting” to raise rates, based on the potential risks threatened from overseas that could choke off growth.
Brainard also cited Friday’s disappointing jobs report as an indication that job growth has slowed, the clearest indication that the poor job growth in May could rule out Fed action for at least this month. She called the report, which showed only 38,000 new jobs in May, “sobering.”
Brainard’s comments come after Fed officials in recent weeks have raised expectations that they would move to lift their interest rate target over the course of the summer. Friday’s disappointing jobs report could complicate those anticipated moves, which Fed members have said are conditional on economic growth and job growth holding up.
For months, Brainard has been among the most “dovish” Fed members, meaning less eager to raise rates to stave off rising inflation and more worried about the dangers that tight monetary policy could keep unemployment high.
Brainard has warned that slowing growth overseas could hurt the U.S. economy’s progress to full health, and underlined some of those concerns Friday, saying that the U.S. is “tightly linked to the rest of the world.” One is that China could face some sort of financial crisis, a prospect that could also rattle U.S. markets and ultimately jobs.
She also specifically mentioned the June 23 “Brexit” vote on the United Kingdom’s relationship with the European Union as a possible threat to financial markets. The Fed “cannot rule out a significant adverse reaction” to a “yes” vote on the referendum, she said.
