
New York Fed’s Dudley: Market Views on Rates Are Too Pessimistic
New York Federal Reserve Bank President William Dudley stated on Sunday that the market’s expectation of only one rate hike before the end of next year is overly pessimistic.
Dudley expressed in prepared remarks for a joint economic seminar held by Bank Indonesia and the Federal Reserve Bank of New York in Bali that it is premature to dismiss the possibility of additional monetary policy tightening this year.
As a voting member of the Federal Open Market Committee, Dudley characterized the market’s expectation of only one more 25 basis point increase through the end of 2017 as “too complacent.”
He added, “If incoming information supports my outlook, then I believe that U.S. monetary policy will likely need to adjust more quickly than what futures prices suggest, moving towards a more neutral stance as the labor market continues to tighten and inflation rises.”