Federal Reserve’s William Dudley leaning toward interest rate hike as Charles Evans stays dovish
A series of speeches from US rate-setters has put the US marginally closer toward an interest rate hike.
Federal Reserve official Charles Evans said the central bank is close to reaching its employment goal, but he is concerned inflation may fail to reach its two per cent target.
"I am far less confident about reaching our inflation goal within a reasonable time frame,” he said.
“I expect core PCE inflation to undershoot two percent by a greater margin over the next two years than do my colleagues.”
However he added that he expects the US economy to remain strong, predicting 2.5 per cent GDP growth next year.
The statements may not come as a surprise to markets given that Evans has tended to be dovish in recent speeches.
William Dudley, another rate setter, was leaning more toward a rate hike.
“The economy looks to be in decent shape and is likely to continue to grow at a slightly above-trend pace,” he told an audience in New York.
“Spare labour resources are shrinking. But there still is some risk that the growth pace could slow as the trade sector acts as a drag on aggregate economic activity.”
“I think it is quite possible that the conditions the Committee has established to begin to normalize monetary policy could soon be satisfied,”
"I will be evaluating the incoming information to see if it confirms my expectation that growth will be sufficient to further tighten the US labour market.”
Federal Reserve chair Janet Yellen disappointed central bank-watchers earlier today after not addressing the current monetary policy situation during opening remarks at a conference.