Fed governor Brainard says rising trade tensions ‘a material uncertainty to the economic outlook


These tensions have weighed on financial markets recently as investors fear a trade war between the two largest world economies may be around the corner.

“Right now, the discussions over trade are really ones that may be impacting individual businesses,” Brainard said.

However, Brainard also said the U.S. economy appears capable of handling tighter monetary policy. “The outlook looks consistent to me for continued gradual increases in the federal funds rate,” she noted. “My anticipation is that the outlook is for continued, solid growth.”

Her comments come as Treasury yields have climbed sharply this week. The benchmark 10-year yield rose to its highest level since Feb. 22, while the two-year yield traded at a 9½-year high.

The Fed expects to raise rates three times this year, according to its latest set of economic projections.

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