Discounting market volatility, Federal Reserve Bank of New York President William Dudley Thursday expressed confidence in the economy’s strength and said the Fed’s projections of three rate hikes this year “seem reasonable.”
Calling it “premature” to predict the number of Fed rate hikes this year, Dudley said in an interview on Bloomberg radio, “three seems reasonable,” but “the jury’s out.”
And market volatility will not change his mind. It’s a question of “magnitude and duration” and if the stock market decline “stop here,” the impact on the economy will be “marginal” and “won’t change our thinking,” he said.
As for the Federal Open Market Committee’s most recent statement, which added the word “further” twice regarding rate hikes, Dudley said his view is the wording shows “a little more confidence” in the economy and the need to remove policy accommodation.
Responding to a question, Dudley said there could be more or fewer than three rate increases, depending on changes in the economic outlook, but admitted it’s “not likely” the economy will be weaker than expected.
Dudley announced plans to leave the Fed in mid-2018.