Recession would surprise Dudley

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The United States economy is healthy, according to Federal Reserve Bank of New York President William Dudley, who said he would be surprised if a recession occurred in the next couple of years.

“The outlook over the next couple of years is pretty good,” Dudley said in a livestreamed conversation at Bloomberg on Friday. “I’d be surprised if the expansion would end in the next year or two.”

The possible hindrances to economic expansion are trade policy and “fiscal sustainability issues,” he said.

While he’s not ready to “declare victory” over inflation, with personal consumption expenditures up 1.9% in the past year, just under the Fed’s 2% target, Dudley said he’s “happy” with where the economy is and he’s comfortable “stepping off the stage” when he leaves office in June, with the inflation number where it is and unemployment at 3.9%.

And should inflation rise above target it’s “not a problem,” he said, noting inflation was under target “for so long.”

When asked if the Fed was too predictable and if it was a bad thing, Dudley said he “wants markets to think with the Fed” and he’s “not a big fan of the Fed deliberately obscuring what its plans are.”

Dudley also said the Fed needs “to be forward looking” and “proactive” in identifying possible asset bubbles.

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Monetary policy William Dudley Federal Reserve Federal Reserve Bank of New York FOMC