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Golden Finance reports that Federal Reserve's Lael Brainard warns that the Fed may need to resume raising short-term policy rates to prevent a renewed decline in long-term bond yields, which could reignite inflation. "If we don't maintain sufficiently tight financial conditions, we face the risk of inflation picking back up and reversing the progress we've made," Brainard stated. "Restrictive financial conditions play a crucial role in aligning demand and supply, and maintaining stability in inflation expectations," she said, noting that the inflation rate is close to the Fed's 2% target, and while the labor market remains tight, it is moving back towards balance. Without maintaining sufficiently strict financial conditions, we cannot expect to maintain price stability. |
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