Fed’s Dudley Says Hike Can be Gentle

The Federal Reserve can be “gentle” in removing monetary stimulus since U.S. inflation remains low and the economic expansion could last five or more years, one of the most influential Fed policymakers said on Wednesday.

“We’re at a point where the economic expansion has plenty of room to run,” said New York Fed President William Dudley, echoing Fed Chair Janet Yellen’s message last month after the central bank decided to leave interest rates unchanged at near a record low of 0.25-0.5 percent.

“Inflation is a little below our target, rather than above our target, so I think we can be quite gentle as we go in terms of gradually removing monetary policy accommodation,” said Dudley, a close ally of Yellen and a permanent voter on policy.

The U.S. central bank lifted rates in December for the first time in nearly a decade and has stood pat since, as market volatility and overseas events were seen to threaten the U.S. economy, which slowed in the first half of the year. Still, most Fed officials still expect to raise rates again before year end.


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 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