The recent narrowing of credit spreads, record stock prices and falling bond yields could encourage the Federal Reserve to continue tightening U.S. policy, one of the most influential Fed officials said in remarks published on Monday.
“Monetary policymakers need to take the evolution of financial conditions into consideration,” Federal Reserve Bank of New York president and CEO William Dudley, a permanent voter on U.S. interest rates and a close ally of Fed Chair Janet Yellen, said on a closed-to-the-press panel on Sunday.
“When financial conditions ease, as has been the case recently, this can provide additional impetus for the decision to continue to remove monetary policy accommodation,” he said according to prepared remarks published by the New York Fed.
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