Federal Reserve Bank of New York President William Dudley said Friday an interest-rate increase this year is pretty likely.
“We are moving ever so slowly toward a point in time where we are going to tighten monetary policy,” Dudley said in an interview with The Wall Street Journal. “I think if the economy continues to evolve along the path we expect, I’d expect we’ll be raising interest rates relatively soon.”
He added, however, “When the economy is growing just a bit above trend, the labor market’s tightening only slowly and inflation is below your 2% objective, there’s not a lot of urgency to tighten monetary policy quickly."
“Every meeting is a live meeting,” Dudley said. But he cautioned “it’s not like if we wait a meeting or don’t wait a meeting, it has huge consequences for the trajectory of the economy.”
Dudley's comments are significant. I view him as a part of the Federal Reserve troika, that also includes Fed Chair JanetYellen and Vice-Chairman Stanley Fischer, that are the primary drivers of Fed policy.
I am not forecasting a Fed rate hike at the December FOMC monetary policy meeting but it is a very real possibility.
It's time for the Austrian-lites to once again bring out their bullhorns and deny that the Fed can raise rates at this time and that the Fed's next move will be to lower raise, possibly even go negative. All of which is absolutely absurd thinking.