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NEW YORK — It wasn’t quite a victory lap. But hours after the consumer price index showed inflation has slowed to its lowest level in two years, National Economic Council Director Lael Brainard had a message to corporate America about how she expects prices to fall in the coming months.

“It will be important for corporations to continue to bring their markups back down after having raised them to unusually elevated levels over the past two years,” she said to a Wall Street audience at an event hosted by the Economic Club of New York on Wednesday.

Markups on goods “should unwind if customers become more price-sensitive and firms compete more intensely,” she added.

Progressives have been keen to describe the soaring prices that occurred over the last two years as “greedflation” — pointing to rising corporate profits as proof-positive that Americans were being bilked as inflation climbed.

While Wall Street may have heard echoes of that in Brainard’s description of so-called “price-price spirals” — which refers to when consumer prices rise faster than the costs borne by businesses — her comments signal that the administration will be amplifying its messaging on market competition. There will be more of this in the coming days and weeks, according to a White House official.

It’s unclear how much air is left in the balloon when it comes to draining inflation from corporate margins.

“I think there is a lot of reason to believe there have been both price-price spirals and wage-price spirals,” Harvard Professor Jason Furman, the former chair of the Council of Economic Advisers under President Barack Obama, told MM.

“Spiral” might not be quite the right word, Furman added. “Persistance” might be a better descriptor since rising wages and input prices kept inflation from falling quickly rather than spiraling “up and up and up.”

Still, Furman said he has not “seen any convincing evidence that margins are still especially high or that there is room to lower them or that increased margins played much of a role in the inflationary process,” he said. “Instead I would say that it was the expectation of higher prices plus the increase in input prices that led businesses to raise prices.”

Even if profit motivations did influence some companies to jack up prices to unusually high levels, the Federal Reserve’s regular survey of economic conditions found that business’ ability to raise consumer prices to reflect higher input costs is now a mixed bag.

Per the Beige Book, which was released Wednesday afternoon: “Contacts in some Districts noted reluctance to raise prices because consumers had grown more sensitive to prices, while others reported that solid demand allowed firms to maintain margins.” (We’ll find out more about how inflation is still affecting some of those inputs when the Labor Department reports the Producer Price Index for June at 8:30 a.m.)

In any case: Moody’s Chief Economist Mark Zandi, who moderated a Q&A with Brainard after she delivered her remarks, told your host that while corporate margins did “gap out” in the early days of the pandemic, “I don’t think it’s adding to inflation at this juncture.”

That said — to Brainard’s point — as more signs point to consumers becoming price-sensitive, “profit margins have gone from being a headwind to inflation to a tailwind to inflation,” he added.

IT’S THURSDAY — It’s a big day for proxy advisers in House Financial Services. What should we be watching for? Send tips, gossip and suggestions to Sam at [email protected] and Zach at [email protected]

Jobless claims and the producer price index will be released at 8:30 a.m. … House Financial Services will hold a pair of hearings on proxy advisers at 10 a.m. and 2 p.m. … San Francisco Fed President Mary Daly speaks at 11:10 a.m. … Fed Gov. Christopher Waller speaks at 6:45 p.m.

First in MM: The banking trades step up attack on Barr’s endgame — The bank lobby is pressuring Federal Reserve Chair Jerome Powell to allow a 120-day comment period on Vice Chair for Supervision Michael Barr’s plan to raise capital requirements. Wall Street has been bracing for the details of Barr’s recommendations for months. A letter to Powell from the American Bankers Association, Bank Policy Institute, Financial Services Forum, Institute of International Bankers and the Securities Industry and Financial Markets Association (SIFMA) claims the proposal will create costs “borne by end users, small businesses and consumers across the country.”

Housing inflation — From Katy O’Donnell and Sam: “Consumer price inflation is easing, sparking hope that the U.S. may be turning the corner on the worst price spikes in decades. Yet the single biggest component of the Consumer Price Index — housing costs — continues to be the main driver of inflation, rising twice as fast as everything else.”

No SBA chief at House fraud hearing — From Zach: House Small Business will hold a hearing today on Covid aid fraud, and you can expect Republicans to focus on a key official who isn’t there.

Small Business Chair Roger Williams said he invited SBA Administrator Isabella Casillas Guzman to testify but she declined. Instead, the committee will hear only from SBA inspector general Hannibal “Mike” Ware, who estimates the agency disbursed $200 billion in potentially fraudulent pandemic assistance. The SBA has a competing estimate: $36 billion. Williams calls it an “egregious discrepancy.”

“The refusal to speak to Congress on this discrepancy is a slap in the face to the American taxpayer,” Williams said in a statement.

Guzman “is on the road all week long,” SBA spokesperson Han Nguyen said. “This is a simple scheduling conflict.”

House Financial Services’ crypto mad-dash — Our Eleanor Mueller reports: The House Financial Services Committee held an informal meeting on crypto Tuesday — members’ first day back on the Hill — as GOP leadership scrambles for consensus ahead of a tentative July 19 markup of its stablecoin and market structure bills, Rep. Mike Flood (R-Neb.) told Eleanor.

“Nobody is shoving anything down anybody’s throat,” Flood said. He said about seven Democrats and 15 Republicans were in attendance — including a few more skeptical Democrats, “who asked, ‘What happens if we don’t do this? Why can’t we just use our existing regulation?’”

One sticking point: How the stablecoin bill deals with anonymous trading, Rep. Bill Foster (D-Ill.) told Eleanor.

“What I’d mostly like is a clear understanding of the majority’s opinion on whether we should allow anonymous trading and self-custody,” Foster said. “That is to me the crucial issue in really getting a significant amount of Democratic support for specifically stablecoins.”

Is a compromise within reach? “It’s hard to tell at this point,” Foster said about the stablecoin bill. Market structure legislation? “Less optimistic.”

And speaking of stablecoins — Axios’ Brady Dale reports that Circle, the company that’s been at the forefront of the stablecoin push in the House, is making a “marginal reduction in headcount.”

Money market fund reform is here — Our Declan Harty: “The SEC ignited a broad backlash Wednesday when it finalized a new slate of rules for money market funds with the hope of finally shoring up a corner of the investment world that has been bailed out by the Federal Reserve twice over the last 15 years.”

— Also from Declan: “House lawmakers passed legislation Tuesday that would offer banks and brokers temporary relief from certain U.S. rules at the heart of a trans-Atlantic debate over investment research.”

Khan’s troubles — WSJ’s Dave Michaels: “Federal Trade Commission Chair Lina Khan is taking on the world’s biggest technology companies — and losing.”

— Bloomberg’s Leah Nylen reports that the FTC is appealing Tuesday’s ruling by a federal judge that allowed Microsoft to move ahead with its acquisition of Activision Blizzard.

What if we measured inflation like Europe? — The WSJ’s James Mackintosh: “Investors who think that underlying inflation is falling but not fast enough for the Fed should be troubled by an alternative measure of price increases.”

Biden’s Fed nominees head to the floor — Our Jasper Goodman: “The Senate Banking Committee approved three Federal Reserve nominees on Wednesday, sending President Joe Biden’s pick to serve as the central bank’s next vice chair to the full chamber alongside two nominees for board seats … Sen. Mike Rounds of South Dakota was the only Republican to support Kugler and Cook.”

— Rounds voted against Cook’s nomination when the Senate approved her along party lines to fill a vacancy last May. After Biden renominated her to a full 14-year term, Rounds told Jasper that he “looked at [her] actions on the board” and decided to back her this time around.

“She’s been consistent and has basically been on the majority with the board throughout that time period so I reconsidered my vote and decided I would support her this time,” he said.

Anti-ESG — From Eleanor and Allison Prang: “House Financial Services Republicans on Wednesday kicked off their ‘ESG month’ with a hearing on ways to shield public companies from pressure on climate and social issues — a GOP exercise that Democrats blasted as anti-free market and anti-diversity.”

— Our Jordan Wolman: “A nonprofit group closely tied to the Democratic Attorneys General Association is launching a six-figure spending campaign to push back against Republican attacks on sustainable investing.”

Bank merger battles heat up — Also from Jasper: Sen. Elizabeth Warren (D-Mass.) took sharp aim at Biden administration banking regulators and Treasury Secretary Janet Yellen on Wednesday, saying at a Senate subcommittee hearing that their recent comments signaling openness to more bank mergers “are stunningly wrongheaded.”