- Fed
New York Fed President William Dudley said US economic environment is "mostly favourable", but the US central bank remains cautious in hiking interest rates as threats loom. Dudley reiterated he was confident that too-low inflation would climb to a 2% target over the next few years, with "economic conditions have finally warranted the start of U.S. monetary policy normalization." The policy maker repeated his view that the Fed should take a gradual and cautious approach to monetary policy tightening amid significant uncertainties and headwinds to growth stemming from the financial crisis, which have not fully abated.
At the same time, Boston Fed President Eric Rosengren said the US central bank is set to raise interest rates more quickly than investors currently expect. Rosengren said US inflation was now "much closer" to the central bank's goal, downplayed weak growth in the beginning of the year, and said the economy is "fundamentally sound." Rosengren, a voter this year on the Federal Open Market Committee, made his remarks eight days before the FOMC is scheduled to meet to voice officials' views on the economy and set the benchmark federal funds rate. Some policy makers have said they do not anticipate a move, and investors put the chance of an April rate hike at zero. In fact, market participants do not expect another rate increase until next year.
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