Dudley Says Fed Shouldn’t Rush to Tighten Policy ‘Too Early’
William C. Dudley, president of the Federal Reserve Bank of New York, said the U.S. central bank shouldn’t rush to tighten monetary policy.
“We’re probably going to have excess slack in the U.S. labor market at least through the end of 2012, and that’s one reason that colored my view that we shouldn’t be overly enthusiastic about tightening monetary policy too early,” Dudley told a forum in Tokyo today.
Fed Policy makers at a meeting last month differed over whether to start removing stimulus this year, according to minutes of their March 15 meeting. “A few participants indicated that economic conditions might warrant a move toward less- accommodative monetary policy this year; a few others noted that exceptional policy accommodation could be appropriate beyond 2011,” according to the minutes.
Since the March meeting, reports showed the labor market and inflation have picked up while consumer confidence slipped and new home sales dropped to a record low. Some regional Fed presidents who were skeptical of stimulus have talked about the need to tighten credit, and Chairman Ben S. Bernanke has yet to indicate his preference for the Fed’s next move.
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