U.S. Fed would "navigate cautiously on rates:" senior official

A member of the Board of Governors of the U.S. Federal Reserve (Fed) said on Thursday that the Economic outlook was softened due to greater downside risks and that the Fed would "navigate cautiously on rates."

"I have revised down my modal outlook for this year, in part reflecting some softening in the recent spending and sentiment data," Lael Brainard told her audience in the state of New Jersey, adding that "this softening could be a harbinger of some slowing in the underlying momentum of domestic demand."

With "softening" Economic outlook ahead, the Fed policymaker said the central bank would watch its steps with care.

"The best way to safeguard the gains we have made on jobs and inflation is to navigate cautiously on rates," Brainard said.

"And with balance sheet normalization now well advanced, it will soon be time to wind down our asset redemptions," according to Brainard.

Addressing the downside risks to the outlook, Brainard mentioned that policy uncertainty had been elevated recently while trade dispute escalation "remains a risk."

"While recent reports suggest some progress," said Brainard, "the prospect of additional tariffs in the trade conflict with China or on automobiles has been cited frequently as a risk in earnings reports and reports from business contacts."

In addition, Brainard said that the recent "longest-ever government shutdown" took toll on the economy, while there were also downside risks abroad like a "no-deal Brexit."

In January, the Fed temporarily suspended its three-year cycle of rate hikes amid concerns about downside risks. The current target range for the Federal funds rate remains at 2.25 to 2.5 percent.