Federal Reserve

Fed's Brainard: Risks may force Fed to wait on rate hike

Brainard: Risk management suggests waiting to raise rates

Risks may force the Federal Reserve to wait to raise interest rates, Fed Governor Lael Brainard said Friday, following a weak May jobs report.

Brainard, a voting member of the Federal Open Market Committee, added that she wants to see more data before deciding whether to back a rate hike. She said Friday's data show the labor market has slowed and she still sees labor market slack.

Lael Brainard
Andrew Harrer | Bloomberg | Getty Images

Her comments followed the Labor Department's report that job creation had plunged in May, with only 38,000 new positions — well below expectations of 162,000.

The data cast doubts on whether the Fed will raise interest rates at its meetings this summer. Recent comments from Fed policymakers had boosted expectations for a rate hike at the central bank's June or July meetings.

Market expectations for a rate increase dropped after the jobs report, according to the CME Group.

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Brainard sees possible downward pressure on growth and inflation. But she added that the economy has made progress toward the Fed's goals.

Brainard added that China, emerging markets and a possible British exit from the European Union pose risks.