Wall Street’s three key stock indexes - the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite - fell 1.4% on the average.
Nasdaq, which houses the biggest technology names of the world, including Amazon, Apple, Netflix and Google, led losses, with a drop of 328 points, or 2.3%, settling at 14,204.
"Given the risks that lie ahead, and the impact of higher inflation, it's clear that the risks for the data in the coming months are firmly tilted to the downside," Craig Erlam, analyst at online trading platform OANDA, said.
Brainard vowed to bring inflation back to the Federal Reserve’s so-called neutral target of 2% later this year, after it grew 6.4% in the 12 months to February, according to the Personal Consumption Expenditure Index.
"The combined impact of rate hikes and balance-sheet reductions will move monetary policy closer to neutral later this year," Brainard, who is awaiting confirmation as Federal Reserve Vice Chair, said in a speech on inflation expectations. "Inflation is too high. High inflation burdens all Americans. Lowering inflation is our most essential duty. We must also sustain the recovery to include everyone."
The US central bank approved its first pandemic-era rate hike on March 16, raising rates by 25 basis points, or a quarter percentage point. Many of its policy-makers have said since that the March hike was too tame and more aggressive increases of 50 basis points, or half percentage point, may be needed. The Federal Reserve is considering as many as seven rate adjustments this year.
Aside from keeping rates at almost zero for two years prior to its March rate hike, the Federal Reserve purchased $120 billion worth of bonds and assets for each month during that period to support the economy. Those asset purchases and others have added some $4 trillion to the central bank’s so-called balance sheet, which now stands at around $8.5 trillion. Federal Reserve officials also hope to trim that figure significantly.
"I expect the balance sheet to shrink much faster than in prior recovery," Brainard said. "After policy becomes more neutral, the extent of additional tightening will be determined by the changing inflation and employment outlooks."
The S&P 500 - which groups the top 500 US stocks - had the second largest dip among Wall Street’s indexes, finishing down 55 points, or 1.2%, at 4,528.
The Dow Jones Industrial Average, which lists travel, aviation and cross-industry value stocks, settled down 281 points, or 0.8%, at 34,641.