Lael Brainard: Fed 'prepared to adjust policy' as trade concerns mount

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Federal Reserve Governor Lael Brainard is backing up Chairman Jerome Powell’s comments on Tuesday reiterating that the central bank is ready to counter any negative impacts of the U.S. trade negotiations.

“Trade policy is definitely a downside risk to the economy, and our job is to sustain the expansion and we’ll need to see going forward what that means for policy,” Brainard told Yahoo Finance in an exclusive interview on Wednesday morning in Chicago.

Those remarks come a day after Powell said the Fed would “act as appropriate to sustain the expansion,” sending markets higher on optimism of a rate cut.

Brainard similarly said the Fed would be “prepared to adjust policy to sustain the expansion” in the midst of uncertainty over trade.

[See Also: Transcript of Fed Governor Lael Brainard’s appearance on Yahoo Finance]

Her comments come amid a busy week of data, as ADP numbers released Wednesday morning showed private payroll gains of only 27,000 in May, the smallest increase in a decade.

Brainard says she is more interested in the payrolls numbers coming from the Bureau of Labor Statistics on Friday.

“I don’t tend to take too much signal from one particular data point,” Brainard said, referring to the ADP numbers. “I like to put it in context and look over several months and look at that trend line.”

On inflation, Brainard said the Fed has not hit its symmetric 2% target on a “sustainable basis.”

Brainard has been participating in a monetary policy conference focused on reviewing the Fed’s future toolbox for monetary policy, as concerns mount over the central bank’s capacity to counter the next crisis with rates so low.

The Fed has said it will announce the findings of its review in the first half of 2020.

Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter @bcheungz.

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