Back
2 Mar 2015
A more aggressive path of monetary policy normalization must be preferred – Fed’s Dudley
FXStreet (Mumbai) - The US central bank may have to get even more aggressive with policy tightening if unusually low bond yields don’t rise, New York Federal Reserve (Fed) President William Dudley said on Friday, adding, however, he sees no urgency to raise short-term interest rates so far.
Key Quotes:
“The fact that market participants have set forward rates so low has presumably led to a more accommodative set of financial market conditions, such as the level of bond yields and the equity market’s valuation, that are more supportive to economic growth,"
“It would be appropriate to choose a more aggressive path of monetary policy normalization as compared to a scenario in which forward short-term rates rose significantly, pushing bond yields significantly higher,”
"Monetary policy cannot be put on autopilot guided only by a fixed policy rule,"
"I do think that the real potential GDP growth rate will be lower over the medium term, held down by much slower growth of labor input and an anticipated continuation of lackluster productivity growth performance.”
Key Quotes:
“The fact that market participants have set forward rates so low has presumably led to a more accommodative set of financial market conditions, such as the level of bond yields and the equity market’s valuation, that are more supportive to economic growth,"
“It would be appropriate to choose a more aggressive path of monetary policy normalization as compared to a scenario in which forward short-term rates rose significantly, pushing bond yields significantly higher,”
"Monetary policy cannot be put on autopilot guided only by a fixed policy rule,"
"I do think that the real potential GDP growth rate will be lower over the medium term, held down by much slower growth of labor input and an anticipated continuation of lackluster productivity growth performance.”