The Federal Reserve will begin a “rapid” reduction of its $9tn balance sheet as soon as its next policy meeting in May and is prepared to take “stronger” action when it comes to raising interest rates in order to bring down inflation, a senior US central bank official has said.

Lael Brainard, who sits on the Fed’s board of governors and is awaiting Senate confirmation to become the next vice-chair, said on Tuesday that the central bank’s “most important task” was to moderate the recent rise in consumer prices, which had disproportionately burdened low- and middle-income families.

“It is of paramount importance to get inflation down,” she said in prepared remarks delivered at a conference hosted by the Fed’s Minneapolis branch. “Accordingly, the committee will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”

She also added that if warranted by the economic data, the Fed was prepared to take “stronger action” when it came to tightening monetary policy, suggesting tacit support for more aggressive moves including doubling the pace at which the federal funds rate is raised and delivering half-point rate rises at forthcoming meetings.

Wall Street is increasingly anticipating at least two such adjustments in 2022, as a growing number of Fed officials have signalled their willingness to swiftly get to a more “neutral” policy level that neither aids nor constrains growth by the end of the year. Estimates of neutral range from 2.3 to 2.5 per cent.

Stronger action could also mean an even faster contraction in the Fed’s holdings of Treasuries and agency mortgage-backed securities, which swelled as the central bank sought to shore up the economy and ensure the smooth functioning of financial markets at the onset of the pandemic.

Chair Jay Powell suggested minutes from March’s policy meeting, to be released on Wednesday, would contain details on how swiftly that process could occur. Economists expect an eventual pace of $60bn a month in Treasuries and $45bn a month in agency MBS.

In outlining her case, Brainard invoked Paul Volcker, the former Fed chief who tamed inflation in the late 1970s by aggressively tightening monetary policy and in turn causing a painful recession. He previously warned that runaway inflation “would be the greatest threat to the continuing growth of the economy . . . and ultimately, to employment”.

Most at risk, she warned, were households with limited resources and tight budget constraints. In a discussion following her remarks, Brainard noted that for a “majority” of workers, increases in consumer prices have outstripped wage growth, meaning reduced purchasing power.

Brainard warned Russia’s invasion of Ukraine would put upward pressure on inflation and probably raise already elevated gasoline and food prices. Supply chain bottlenecks could become further extended, especially given new lockdowns that have been announced in China to contain the spread of Covid-19, developments that further underscore the need for the Fed to move in an “expeditious” way to tighten monetary policy.

A sell-off in the $22tn Treasury market accelerated on Tuesday, with the yield on the benchmark 10-year US sovereign bond climbing 0.11 percentage points to 2.5 per cent. That put it just below a three-year high last month. While selling was most intense in longer-dated US government debt, yields on policy-sensitive two-year notes also rose, reaching 2.5 per cent.

Yields rise when a bond’s price falls.

US stocks also slid. The S&P 500 stock index, which had been up marginally before Brainard spoke, closed 1.3 per cent lower on the day. The technology-heavy Nasdaq Composite declined 2.3 per cent.

Additional reporting by Eric Platt

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