Speaking at the
But he did say that if the Fed began to raise rates and the markets showed little or no reaction, pushing up bond yields only slightly, then the Fed may consider a faster pace of rate hikes.
"In contrast," he added, "if bond yields were to move sharply higher ... then a more cautious approach might be warranted."
Dudley said that he feels the Fed will allow inflation to hover above its threshold mark of 2 percent without raising interest rates, taking into account that unemployment remains high.
"My own view is that 2% is not a ceiling," said Dudley. "I would expect that we would spend as much time slightly above 2% as below it."
He did say that if unemployment continues to remain high "then the unemployment consideration would dominate because we would be further from the unemployment objective than we are from the inflation objective."
Dudley's comments seem pretty consistent with what the Fed has said in the past, suggesting that the central bank is not overeager to raise rates even if inflation reaches the set target of two percent. Economists and investors have been keenly awaiting any indication of when the Fed will raise rates, with many speculating that this first hike of short-term rates will come some time next year.
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