Federal Reserve policy to stay restrictive 'for some time', Lael Brainard says

Drew Angerer

Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target, and tighter financial conditions to work their way through different sectors to bring inflation down," said Federal Reserve Vice Chair Lael Brainard at a conference hosted by the Federal Reserve Bank of New York, according to prepared text.

"For these reasons, we are committed to avoiding pulling back prematurely," she said.

Still, she's aware that uncertainty is currently high "and there are a range of estimates around the appropriate destination of the target range for the cycle." Thus, Brainard assures that the central bankers will be data dependent.

Update at 9:13 AM ET: She does report that progress is being made, pointing to the yield curve. "The real yield curve is now in solidly positive territory at all but the very shortest maturities, and with the additional tightening and deceleration in inflation that is expected over coming quarters, the entire real curve will soon move into positive territory," she said.

"We are attentive to financial vulnerabilities that could be exacerbated by the advent of additional adverse shocks," Brainard said. For example, in some emerging economies, high interest rates and weaker demand in advanced economies could increase capital outflow pressures.

"And these pressures would be particularly challenging for borrowers with currency mismatches between their assets and liabilities," she said.

Earlier, PCE price index rose hotter than expected in August, suggesting Fed stays hawkish