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Fed's Brainard: Time needed to assess effect of rate cuts

Fed's Brainard: Time needed to assess effect of rate cuts
FILE PHOTO: Federal Reserve Board Governor Lael Brainard speaks at the John F. Kennedy School of Government at Harvard University in Cambridge, Massachusetts, U.S., March 1, 2017. REUTERS/Brian Snyder -
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Brian Snyder(Reuters)
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(Reuters) – Federal Reserve Governor Lael Brainard said on Wednesday she would like to wait and see how the interest rate cuts made this year ripple through the U.S. economy before making further changes to monetary policy.

“The committee has made a pretty substantial adjustment in the path of rates over the past few meetings,” Brainard said on CNBC. “It will take some time to see that work through the economy so I certainly want to monitor and assess how the economy is reacting to those cuts.”

Brainard said the risks to the economy have been “tilted to the downside for some time” and that some businesses are sitting on the sidelines while they wait for trade uncertainty to be resolved.

Brainard said she sees some potential imbalances in business debt, especially loans to the riskiest borrowers. The influential Fed member chairs the Fed’s financial stability committee, which issued a report last week flagging high levels of corporate debt and new “stablecoin” cryptocurrency proposals as potential risks to the financial system.

Brainard also reiterated views shared by some of her peers that the labour market is strong and consumer-focused businesses are doing well.

Fed officials lowered interest rates in October for the third time this year, bringing the central bank’s target range to a level of 1.5% to 1.75%. The Fed will release meeting minutes from the October gathering at 2 p.m.(1900 GMT) on Wednesday.

(Reporting by Jonnelle Marte, Editing by Franklin Paul and Andrea Ricci)

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