Fed’s Brainard Advocates Easy U.S. Monetary Policy for China, Stocks Roar

Fed’s Brainard has always been a dove. But with all of the hawkish statements out there, the market simply needed to hear what it already knew. There’s no fucking way the Fed is gonna hike rates in September, or ever for that matter. As a result, stocks are soaring.

In what has become common place today, America’s central bank is dictating policy on behalf of China, literally.

“Downside risks are also present in emerging market economies, where growth has slowed rapidly in recent years,” she added.

“Most importantly, China is undergoing a challenging transition from a growth model based on investment, exports, and debt-fueled state-owned enterprises to one driven by consumption, services, and dynamic private businesses. Because of the adjustment costs along this transition path and demographic trends, Chinese growth will likely continue to slow.”

Because of China, Brainard believes the Fed should hold off on rate hikes.

“I believe this approach has served us well in recent months, helping to support continued gains in employment and progress on inflation.”

She concluded, worrying a great deal about overseas:

“Foreign consumption and investment are weak, while foreign demand for savings is high, along with an elevated demand for safe assets.”