US Fed’s Dudley Expects Policy Change at March’s FOMC

William Dudley, the head of the Federal Reserve Bank of New York, said a policy meeting later this month is a good time for the U.S. central bank to adjust its published guidance on when interest rates would eventually rise, according to a published report.

The Fed, which has held rates near zero since late 2008, has said it would not consider a rate rise until well after the U.S. unemployment rate falls below a threshold of 6.5 percent, as long as inflation remains below 2.5 percent.

A government report earlier on Friday showed the U.S. unemployment rate ticked up to 6.7 percent in February from 6.6 percent in January, still very close to the Fed’s long-standing threshold.

A Fed policy-setting meeting on March 18-19 would be “a reasonable time to revamp (the) statement to take out that 6.5 percent threshold,” Dudley said in an interview with the Wall Street Journal, calling the threshold “obsolete.”

Other policymakers have made similar comments. But as a key decision-maker very close to Fed Chair Janet Yellen, Dudley’s comment is yet the best indication that the Fed will change the policy in March.

via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza