Fed's Dudley drops a major dovish hint:
- International developments have raised downside risks
- Still appears to be excess slack in labor market
- Important not to overreact to market developments
- Sept rate hike seems less compelling to me than it was a few weeks ago
- Don't expect US dollar to rise indefinitely or oil to fall indefinitely
- China economic slowdown could affect prices of US goods and services
- Core inflation rate pretty stable so far
- China slowdown has significant implications for commodities
- International and financial developments can impinge outlook
- Fed concerned about everything that affects outlook, not just economic data
- "short term" market volatility does not have significant implications for US economic recovery
- Doesn't have a view on why the market is moving
- "I've said many times I do really hope we can raise interest rates this year."
- Wants to see data unfold before timing liftoff
- Flags next week's UMich consumer sentiment survey to gauge impact of stock market drop on economy
- Stock market turmoil didn't start in US
- "This isn't about" US
- He's reasonably confident China can handle challenges
- We are a long way from additional quantitative easing
Major dovish signal from the Fed's Dudley but his 'hope' to hike rates this year has taken a bit of the shine off of it.
