The Federal Reserve would probably not be able to cut interest rates as aggressively as the last time around if it were faced with a U.S. recession in the next few years, New York Fed President William Dudley said on Monday.
Beginning in 2007, the U.S. central bank slashed rates by 5.25 percent as the financial crisis took hold. With rates having since remained near zero, Dudley said the Fed now has less policy room to respond and thus may be cautious about raising rates.
“If another recession were to happen in the next few years, it is likely that the FOMC would be unable to respond with a cut of such magnitude,” Dudley, speaking at a private conference at the New York Fed, said of the policy-making Federal Open Market Committee.
“A risk management approach to monetary policy would suggest that the more concerned one is with the effectiveness of these policies at the zero lower bound, the more cautious one would be in the process of removing accommodation,” he added in prepared remarks.
via Reuters
Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.