President Joe Biden’s top economic adviser downplayed the risk of a resurgence in inflation as policymakers shift their focus to
National Economic Council Director Lael Brainard said Monday that the U.S. economy had reached a “turning point” and proposed
“Inflation is returning to normal levels, and it is important to safeguard the important labor market progress we have made,” Brainard said in a speech to the Council on Foreign Relations in Washington.
When asked about future inflation risks, she pointed to the housing market’s impact on the consumer price index, describing it as the “stickiest part.” Stripping of homes, USA
“We ultimately need more housing to increase affordability,” she said. “That will be more possible in an environment that is more supportive in terms of market interest rates.”
Mortgage rates have fallen in recent weeks due to a rally in the Treasury market, fueled by widespread expectations that the Federal Reserve will initiate a cycle of monetary easing this month. Traders expect the Fed to cut rates by at least 25 basis points on Wednesday.
Brainard, a former vice chairman of the Fed, emphasized that Biden has committed to respecting the Fed’s independence.
She expressed confidence in the strength of the US economy and noted the state of the labor market and resilient consumption. Still, she cited housing as an area where “it’s really important” that further efforts are made, and urged lawmakers to do their part as well.
“We have some ability to provide incentives to states and localities to remove some barriers, but we really need Congress to do so,” Brainard said. “Unfortunately, we just had Republicans in the Senate vote against a bill that had strong bipartisan support in the House of Representatives and that would have led to the construction of 200,000 more affordable housing units.”
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Vice President Kamala Harris has praised the current administration’s efforts to crack down on “price gouging” while