New York Federal Reserve Bank president William Dudley late Thursday said fiscal policy consolidation coordinated with global rebalancing of consumption and savings is needed to sustain world recovery — and it needs to be done soon.

There must be credible exits from both fiscal policy and monetary policy, he said, which can be hard to execute. Waiting — at least for the fiscal adjustments — can be “a risky strategy.”

Speaking to the Society of Business Economists, Dudley scanned the challenges being faced by economies that must scale back fiscal stimulus while addressing deficits that are partly structural, saying the way that is done “will determine whether the path forward will be relatively smooth or instead will be more tortuous.”

— Market News International

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