Fed's Brainard: It will take some time to achieve substantial further progress

Federal Reserve Governor Lael Brainard said on Tuesday that the US Fed will show "resolute patience" in waiting to meet its employment and inflation goals before pulling back on support for an economy still healing from the pandemic,

Brainard said any Fed action to tighten monetary policy is now "conditioned on employment and inflation outcomes."

"This approach implies resolute patience while the gap closes between current conditions and the maximum-employment and average inflation outcomes," the Fed has set for itself, Brainard said.

"It will take some time to achieve substantial further progress," towards the inflation and employment goals, Brainard said. "By taking a patient approach based on outcomes rather than a preemptive approach based on the outlook, policy will be more effective."

Key comments

Central bank will show "resolute patience" in waiting for economy to improve before any tightening.

Sees "considerably brighter" outlook for u.s., though risks remain.

Says watching inflation, expectations data carefully, but says "little evidence" a tightening economy will produce outsized price moves.

Moving too soon risks "unwarranted" loss of opportunity for the unemployed.

Says much uncertainty around pace of recovery, given issues like how much stimulus money will be spent versus saved.

Market implications

There was no market reaction to the comments as traders continue to price in inflation expectations. 

The theme on Tuesday is very much risk-off due to coronavirus concerns and geopolitical risks. 

The US dollar is firmly bid, up 0.66% on the day.