Fed official's speech lowers expectations for hike next week

WASHINGTON -- Investors, at least, suddenly seem more confident about what the Federal Reserve will announce when it meets next week:

Nothing.

Stocks soared Monday after an influential Fed policymaker indicated she was in no hurry to raise interest rates despite intensified speculation the Fed is poised to tighten U.S. borrowing rates.

After the speech by Lael Brainard, investors pegged the chance of a rate hike next week at just 15 percent, down from 24 percent before her remarks, according to figures from the CME Group.

In her speech in Chicago, Brainard suggested the risk that higher rates might damage a fragile economy exceeds the risk that lower rates might ignite inflation.

As a governor on the Fed's board in Washington and a close ally of Chair Janet Yellen, Brainard is seen as a key figure at the central bank.

No governor has been on the losing side of a Fed vote since 2005.

Presidents of the Fed's regional banks are far more likely to cast dissenting votes.

The Dow Jones industrial average soared 240 points --nearly 1.5 percent -- Monday. About half the gain came after Brainard's speech.

Financial markets had been on edge after several Fed officials in recent days had signaled a willingness to resume raising rates when they meet next week.

Low rates have fueled a steady rise in stock prices.

Until the recent comments, investors had expected the Fed to delay a rate hike until December or later.