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The Federal Reserve should be prepared to raise short-term interest rates “soon” as the US closes in on full employment, inflation heads towards target and global growth assumes a more solid footing, a top policymaker said on Wednesday.

Lael Brainard, a member of the Fed’s board of governors, said the risks to the outlook are now more balanced than they have been for two years, meaning the central bank should continue along its gradual path towards less accommodating monetary policy.

“Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path,” said Ms Brainard in a speech in Cambridge, Massachusetts.

The bullish outlook is striking given Ms Brainard has previously been seen as one of the most dovish policymakers at the central bank. It will reinforce expectations in financial markets that the Fed is gearing up for a rate rise as soon as its meeting this month, with the market focus shifting to a critical speech from Fed chair Janet Yellen on Friday.

In her speech, Ms Brainard also said that as the Fed normalises policy there would be an increasing focus on reducing the size of the Fed’s balance sheet, which was swollen by crisis-era interventions.

She said:

“Recent developments suggest that the macro economy may be at a transition. With full employment within reach, signs of progress on our inflation mandate, and a favorable shift in the balance of risks at home and abroad, it will likely be appropriate for the Committee to continue gradually removing monetary accommodation. As the federal funds rate continues to move higher toward its expected longer-run level, a transition in balance sheet policy will also be warranted. These transitions in the economy and monetary policy are positive reflections of the fact that the economy is gradually drawing closer to our policy goals.”

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