National Economic Council Director Lael Brainard said Monday that the U.S. economy had reached a "turning point" and suggested lower market interest rates could help address housing costs — the biggest component of price increases.

"Inflation is coming back down close to normal levels, and it is important to safeguard the important labor market progress we have made," Brainard said in remarks at the Council on Foreign Relations in Washington. 

Asked about inflation risks ahead, she pointed to the impact of housing on the consumer price index, describing it as the "stickiest piece." Stripping out housing, the U.S. consumer price index is only rising about 1.8%, she said.

"We actually need more homes, ultimately, to get to greater affordability," she said. "That will be more possible in an environment that is more supportive in terms of the market interest rates."

Mortgage rates have tumbled in recent weeks, reflecting a rally in the Treasuries market spurred by widespread expectations that the Federal Reserve will this month launch a cycle of monetary easing. Traders are anticipating the Fed will cut its benchmark rate by at least 25 basis points on Wednesday.

Brainard, a former Fed vice chair, highlighted that Biden has made a commitment to respecting the independence of the Fed. 

She expressed confidence in the strength of the U.S. economy, pointing to the state of the labor market and resilient consumption. Still, she singled out housing as an area where "it's really important" that further efforts are made, and urged lawmakers to also do their part. 

"We have some ability to provide incentives to states and localities to remove some of the obstacles, but we really need Congress," Brainard said. "Unfortunately, we just had Senate Republicans voting against a bill that had strong bipartisan support in the House that would have led to the construction of 200,000 more affordable homes."

Both presidential candidates have made policy pushes on housing with the election just 50 days away. 

Vice President Kamala Harris has touted the current administration's efforts to crack down on "price-gouging" while floating a proposal to build 3 million new homes and rental units. Former President Donald Trump made it a focus of his recent West Coast campaign swing, including a promise to free up federal land in Nevada for more housing.