Threshold for changing course on tapering is ‘pretty high’: Fed’s Dudley

http://feeds.reuters.com/~r/reuters/businessNews/~3/V7oBOm4s_GU/story01.htm (Reuters) - The U.S. economic outlook would have to change substantially for the Federal Reserve to alter the pace at which it is winding down asset purchases, a top U.S. central banker said on Thursday.

While growth is likely to quicken this year, the threshold for changing course on stimulus withdrawal is "pretty high," said New York Fed President William Dudley during an event hosted by The Wall Street Journal.

"The outlook would have to change in a material way relative to my expectation," he added.

The Fed this year started winding down five years' worth of unprecedented accommodative policies meant to fight the 2007-09 recession and foster a stronger recovery. That means the central bank will eventually stop buying trillions of dollars worth of bonds and holding overnight interest rates at zero.

Dudley acknowledged that recent fierce winter weather in parts of the country have depressed activity in early 2014, but said those effects will be both hard to gauge and transitory.

"The weather is going to make reading the data over the near term a little more difficult," he said.

"The first quarter will probably be less than 2 percent for annualized growth," Dudley said. In the spring, "we'll see some of these weather effects dissipate."

Still, he said the economy would likely be better this year than last, "on a 3 percent type of growth trajectory, which should be enough to generate payroll gains that lead to continued gradual improvement in the labor market."

But he was quick to add that headwinds are likely to persist for some time.

"We have a long time to go before we actually have to think about raising short-term rates in my opinion," he added.

According to Fed futures contracts, the first rate hike is not likely until the second half of 2015, with a 63 percent chance that it comes at the Fed's July 2015 meeting.

Dudley called current market expectations "appropriate" based on what is known about the economy today.

Read Original Story...
HEADLINES
Canada, Mexico and Japan want to revive the Trans-Pacific Partnership free trade deal
Defense stocks at record highs after Trump signs $110 billion arms deal with Saudi Arabia
Trump’s proposal to sell oil reserve shows decline in reliance on imports, weaning off OPEC crude
Japan, Trans-Pacific Partnership members to pursue trade deal without the U.S.
OPEC seen extending output cuts as Saudi Arabia says most members on board
Oil prices rise as OPEC, other producers are expected to extend, deepen supply cuts
About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

You can find more information about me on my Google Profile.

Speak Your Mind

*

Newsletter

Zero spam.