Inflation: US market unhealthy: Fed’s Dudley

"He expects the soft inflation to firm further in the months ahead and move toward the Fed’s 2% goal", says Fed Dudley

NEW YORK: An influential Federal Reserve policymaker unscored his commitment to accommodative policies, saying the   market is not yet healthy and inflation should firm in the months ahead.

New York Fed President William Dudley’s speech was very similar to one he gave in which he strongly defended the US central bank’s bond-buying programme and said the economic recovery still needs support. He pointed to conflicting information on the US labour market, which was badly bruised by the great recession but has improved in recent years, with unemployment now down to 7.3% from a 10% peak in 2009.

Dudley said that numerous indicators, including the behaviour of labour compensation, are all consistent with the view that there remains a great deal of slack in labour  markets. He said that he expected the soft inflation to firm further in the months ahead and move toward the Fed’s 2% goal as the inflation persistently below 2% could pose serious risk to the economic performance.

Published in The Express Tribune, September 29^th, 2013.

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