2017.08.1500:25:00UTC+00Fed’s Dudley In Favor of Additional Rate Hike in 2017

Federal Reserve Bank of New York President William Dudley said it is not unjustifiable to price in another rate hike announcement from the central bank in September to begin reducing its balance sheet and expressed his support for another interest-rate hike this year if the economy develops in line with his expectations.

Expectations for a September announcement on when the fed will start to wind down its balance sheet were not “unreasonable”, the Fed official said. Dudley said that the plan is on the table and is generally well-received and fully anticipated. He mentioned that in the last FOMC statement, they said they expected it to happen relatively soon.

Dudley's comments indicated optimism at a time when inflation continued to be under the Fed's goal even as the labor market continues to grow and the overall economy is gaining steam. The New York Fed chief dismissed the weak price data as a trend that may transitionary, indicating that the officials might be willing to overlook the slowdown even as it becomes more apparent.

He also said that the labor market is expected to continue to tighten, wages are seen to grow and these factors will ultimately drive up inflation towards the central bank's 2 percent objective.