Date
28 May 2017
The US economy will be strong enough to warrant a rate increase in the next two months, says New York Federal Reserve President William Dudley. Photo: Bloomberg
The US economy will be strong enough to warrant a rate increase in the next two months, says New York Federal Reserve President William Dudley. Photo: Bloomberg

Summer rate hike ‘reasonable expectation’: NY Fed chief

Expectations that the next hike in US interest rates could take place in the summer are reasonable, New York Federal Reserve President William Dudley said Thursday, joining the chorus of voices predicting a June-July tightening.

“If I’m convinced my forecast is sort of on track, then I think a tightening in the summer, in the June-July time frame, is a reasonable expectation,” Reuters quoted Dudley as telling reporters.

He said he was “quite pleased” that investors had increased bets on the likelihood that rate increases will come soon.

“We are on track to satisfy a lot of the conditions” for a rate increase, Dudley said, pointing to an improving labor market and prospects that inflation will return to the Fed’s 2 percent target.

He added, though, that a key factor arguing for the Fed biding its time a little was the potential for market turmoil around Britain’s vote in late June about whether to leave the European Union.

Dudley’s comments came after minutes of the Fed’s April meeting, released on Wednesday, showed that most policymakers felt a rate increase could be needed in June.

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