William Dudley calls for “cautious” approach to lifting rates.
WASHINGTON (MarketWatch) — A key Federal Reserve official on Friday called for a “cautious and gradual” approach to lifting interest rates.
New York Fed President William Dudley, who gets a vote at every Federal Open Market Committee meeting, said the risks to the economy are more to the downside than the upside.
“The low levels of energy and commodity prices may signal more persistent disinflationary pressures than I currently anticipate, while renewed tightening of financial market conditions could have a greater negative impact on the U.S. economy,” Dudley said at a speech at the University of Bridgeport. He also fretted about foreign growth prospects.
“Given my outlook and risk assessment, I judge that a cautious and gradual approach to policy normalization is appropriate,” he said.
He also said the Fed had to be cautious about lifting rates because of the “limited” ability to reduce them. The Fed lifted rates for the first time in nearly a decade in December, to a range of between 25 and 50 basis points.