Dudley in the Q&A

  • Quite pleased to see market increase view on market's June-July views
  • Data will drive what Fed actually does
  • If he's convinced his forecast is on track, then June or July hike is reasonable
  • Brexit is a variable that could influence Fed
  • Sees economy growing above-trend with a tighter labor market
  • Expects Q2 to be stronger than Q1, sees growth over 2%
  • Q1 slowdown was a little bit of a surprise
  • Strong retail sales report supports view that this quarter will be stronger
  • Market more comfortable with Chinese FX, concerns could return
  • Fed won't lose credibility if data doesn't warrant a hike
  • Economy is on track to satisfy most conditions for rate hike
  • Becoming more confident inflation will rise back to 2%
  • Labor market showing uptick in wage pressures
  • The bigger uncertainty is what growth will be
  • Fed has been pretty clear lately that there would probably be a rate hike this year
  • Core CPI has been 'broadly stable'
  • He was surprised the markets weren't pricing in a higher chance of a hike
  • Range of views on the FOMC is relatively narrow

Dudley is a big-time dove. He shifted a bit a month ago in a speech but he's significantly more hawkish today.

Dudley ends remarks