Fed’s Dudley Says Hike Likely in 2015 and Inflation Target in 2016

New York Federal Reserve Bank President William Dudley said on Monday the Fed remains on track for a likely rate hike this year and could reach its inflation target next year, faster than many other policymakers anticipate.

Dudley said the first hike could come as soon as October as policymakers take stock of an improving economy.

“If the economy continues on its trajectory … it’s a pretty strong case for liftoff,” with the Oct. 27 to 28 session “live” for the rate hike debate, Dudley said at an event sponsored by the Wall Street Journal in New York. The Fed also meets Dec. 15 to 16. [FED/DIARY]

The U.S. central bank delayed a hike at its September meeting amid uncertainty about the global economy, a U.S. market selloff and concern that inflation might fall further away from the Fed’s two percent target.

But Dudley said he now feels inflation could reach that target sometime next year, a year or more sooner than the median forecast by Fed policymakers earlier this month.

Dudley said he was confident weak global economic conditions and the strong U.S. dollar would prove to be passing influences and allow the Fed to raise rates soon.

via Reuters

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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