Federal Reserve Bank of New York President William C. Dudley comments on the U.S. economy. He spoke to reporters following a speech today in San Juan, Puerto Rico. His remarks came after the Labor Department reported that the unemployment rate dropped to 8.8 percent in March and employers added 216,000 jobs, more than economists estimated.
“The recovery looks to be better than six months ago but not as good as a month ago,” Dudley said. “The payroll numbers were really the missing ingredient in the picture in terms of the sustainable economic recovery,” he said. Still, “we don’t want to overstate how far we’ve come.”
On inflation:
“We’ve seen some commodity-price pressures” and those “are probably going to cause headline inflation to drift up further,” Dudley said. “Those have virtually nothing to do with U.S. monetary policy.”
“We’re in a little bit of a bubble for commodity-price pressure,” he said. Even so, the “Fed should be very comfortable looking through that as long as inflation expectations are stable.”
On the Fed’s exit strategy:
“It’s too soon to say what we will or will not have to do,” Dudley said. “The important thing that I would emphasize is we have the ability to exit when the time comes,” and “the fact that we embarked on QE2,” in “no way impairs our ability to exit when the time comes.” The Fed’s $600 billion bond- purchase program is known as QE2, for the second round of so- called quantitative easing.
The benefits of additional easing have “diminished a bit,” Dudley said. The need for quantitative easing “has fallen because the risk of deflation has diminished considerably.”
On recent comments by Fed policy makers:
“It’s important to not overstate the degree of disagreement” on the Federal Open Market Committee, Dudley said. “Whenever the economy comes to a turning point, obviously there’s going to be discussion about the appropriate time and way to exit,” he said.
“I don’t think the disagreement is as deep as people are representing.”
“All the FOMC members share a commitment to ensuring the exit occurs in a timely and effective way,” though “people have slightly different views on the economic outlook.”
On the Fed’s mandates for full employment and price stability:
“I’m happy to operate under a dual mandate,” Dudley said. “The consequences for monetary policy would be very, very small” if the Fed focused on prices alone, Dudley said. “Achieving price stability over the long run is a necessary condition to achieving full employment.”
The timing of a switch now would be “harder to motivate” because the Fed isn’t equally far away from its two objectives, Dudley said. “We’re pretty close to our inflation mandate. We’re pretty far away from our full employment mandate.”
Source: www.bloomberg.com
“The recovery looks to be better than six months ago but not as good as a month ago,” Dudley said. “The payroll numbers were really the missing ingredient in the picture in terms of the sustainable economic recovery,” he said. Still, “we don’t want to overstate how far we’ve come.”
On inflation:
“We’ve seen some commodity-price pressures” and those “are probably going to cause headline inflation to drift up further,” Dudley said. “Those have virtually nothing to do with U.S. monetary policy.”
“We’re in a little bit of a bubble for commodity-price pressure,” he said. Even so, the “Fed should be very comfortable looking through that as long as inflation expectations are stable.”
On the Fed’s exit strategy:
“It’s too soon to say what we will or will not have to do,” Dudley said. “The important thing that I would emphasize is we have the ability to exit when the time comes,” and “the fact that we embarked on QE2,” in “no way impairs our ability to exit when the time comes.” The Fed’s $600 billion bond- purchase program is known as QE2, for the second round of so- called quantitative easing.
The benefits of additional easing have “diminished a bit,” Dudley said. The need for quantitative easing “has fallen because the risk of deflation has diminished considerably.”
On recent comments by Fed policy makers:
“It’s important to not overstate the degree of disagreement” on the Federal Open Market Committee, Dudley said. “Whenever the economy comes to a turning point, obviously there’s going to be discussion about the appropriate time and way to exit,” he said.
“I don’t think the disagreement is as deep as people are representing.”
“All the FOMC members share a commitment to ensuring the exit occurs in a timely and effective way,” though “people have slightly different views on the economic outlook.”
On the Fed’s mandates for full employment and price stability:
“I’m happy to operate under a dual mandate,” Dudley said. “The consequences for monetary policy would be very, very small” if the Fed focused on prices alone, Dudley said. “Achieving price stability over the long run is a necessary condition to achieving full employment.”
The timing of a switch now would be “harder to motivate” because the Fed isn’t equally far away from its two objectives, Dudley said. “We’re pretty close to our inflation mandate. We’re pretty far away from our full employment mandate.”
Source: www.bloomberg.com
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