Federal Reserve Governor Lael Brainard on Friday said the U.S. central bank should move with "greater caution than normal" to adjust interest rates given weakness overseas. In a speech to the International Monetary Fund, Brainard, a key dove on the U.S. central bank, said that further weakening from abroad could pose a downside risk on the U.S. economic outlook. Because the Fed's target interest rate is already set at zero, the ability to offset any weakness was limited, she noted. Brainard said the "feedback loop" between market expectations of divergence between the U.S. and its major trading partners and financial tightening in the U.S. means that "material restraint to U.S. conditions is already in place."
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