March 2, 2017 / 12:31 AM / 6 months ago

Brainard says fiscal boost could lead to higher inflation, interest rates

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.Brian Snyder

BOSTON (Reuters) - A major boost in government spending may only serve to drive inflation and interest rates higher in an economy considered to be operating close to its potential, Federal Reserve Governor Lael Brainard said on Wednesday.

"It would tend to push in the direction of being consistent with greater inflation and therefore greater increases in the trajectory of the interest rate," Brainard said at a Harvard University forum. Depending on how it is structured and timed, "there is not much change to potential growth or aggregate supply."

Reporting by Howard Schneider; editing by Diane Craft

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