Stimulus To Be Prolonged If Federal Reserve Bank Misses Forecast Projections

New York Fed president William Dudley
William Dudley, president of the Federal Reserve Bank of New York

William Dudley, the New York Federal Reserve president, said Thursday the central bank may prolong its asset-purchase program if the economy’s performance doesn’t meet forecasts.

“If labor market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook -- and this is what has happened in recent years -- I would expect that the asset purchases would continue at a higher pace for longer,” Dudley said in New York.

Dudley went on to say that any reduction in the pace of the asset purchase should not be seen as a sign that the Fed is  calling off its stimulus efforts.

A first-quarter report by the Commerce Department showed that growth in the U.S was less than forecast due to the payroll tax hike, which contributed to a reduction in consumer spending.

“The labor market still cannot be regarded as healthy,” Dudley said. “I continue to see the economy as being in a tug-of-war between fiscal drag and underlying fundamental improvement, with a great deal of uncertainty over which force will prevail in the near-term.”

Join the Discussion