The Federal Open Market Committee will be gradual and cautious in raising the fed funds rate target, Federal Reserve Bank of New York President William Dudley said Monday.
Following years of near-zero rates, “economic conditions have finally warranted the start of U.S. monetary policy normalization," Dudley told a conference in New York, according to prepared text released by the Fed. "But these monetary policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated."
He said gradual and cautious is warranted “because of our limited ability to reduce the policy rate to respond to adverse developments."
Dudley said he expects inflation to return to the Fed’s 2% target over the “next few years.”
