Fed’s Brainard to the Rescue: Cites ‘Fragility’ of Global Markets as a Reason to Take a ‘Gradual’ Approach to Monetary Tightening

Doublespeak, son.

It’s the globalization of the Federal Reserve, an institution, like Michael Knight (extra kit),  who does not exist in the government’s eyes and has never been audited. Brainard makes the case to ‘moderate’  Fed tightening, in spite of the fact there has never been a Fed tightening cycle with so many months in between hikes than now.

They’re fucking with us. The Fed has jawboned for higher rates over the past 6 month, with relentless stupidity. Following one milquetoast jobs report, Brainard is out talking greasy about the Fed needing to chill the fuck out because China is fucked.

“In this environment, prudent risk management implies there is a benefit to waiting for additional data to provide confidence that domestic activity has rebounded strongly and reassurance that near-term international events will not derail progress toward our goals,” Brainard said in a speech on Friday in Washington.

“Several factors suggest that the appropriate path to return monetary policy to a neutral stance could turn out to be quite shallow and gradual in the medium term,” she told an audience at the Council on Foreign Relations.

“While the easing in financial conditions since mid-February is very welcome, it is important to recognize that some of the conditions underlying recent bouts of turmoil largely remain in place, and an important reason for the fading of this turbulence was the expectation of more gradual U.S. monetary policy tightening,” she said.

Global markets remain fragile, she said, with sensitivity to exchange-rate movements remaining elevated. That is consistent with research suggesting “cross border financial transmission is likely to be amplified” as long as interest rates set by major central banks remain near zero, she said.

“The fragility of the global economic environment is unlikely to resolve any time soon,” she said.

“We cannot rule out a significant adverse reaction to such an outcome in the near term, such as a substantial jump in financial risk premiums,” she said. “Because international financial markets are tightly linked, an adverse reaction in European financial markets could affect U.S. financial markets, and, through them, real activity in the United States.”

QE for life. The story ends with a hydrogen bomb detonation.