US Fed’s Dudley Says Mid 2015 Rate Reasonable

The U.S. Federal Reserve can reasonably wait to raise interest rates until mid-2015 without risking an undesirable rise in inflation, an influential Fed policymaker said on Tuesday.

“We think we can get the unemployment rate considerably lower and still not have an inflation problem,” William Dudley, president of the New York Federal Reserve Bank, told a Puerto Rico accounting group.

In May, the U.S. jobless rate stood at 6.3 percent, the lowest level since the end of 2008, and unchanged from April. Inflation has been running below the Fed’s 2 percent goal, although some recent readings have been firmer.

“The market expectations are that the Federal Reserve will start to raise short-term interest rates around the middle of 2015 – that sounds to me like a reasonable forecast,” said Dudley after a speech in which he warned that Puerto Rico’s growing debt load may be unsustainable. “But, you know, forecasts often go astray.”

Dudley, who as chief of the New York Fed holds a permanent vote on the U.S. central bank’s policy-making panel, speaks from experience: Over the past several years, the Fed has been frequently overly optimistic about economic growth prospects.

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