New York Fed President William Dudley said in a speech on Friday that the Fed should be cautious in raising its interest rate as there were risks from abroad to the U.S. economy.
“I judge that a cautious and gradual approach to policy normalization is appropriate. Moreover, caution is also called for because of our limited ability to reduce the policy rate to respond to adverse developments,” he said.
Dudley noted that there were still the downside risks to U.S. inflation and growth outlooks.
“The low levels of energy and commodity prices may signal more persistent disinflationary pressures than I currently anticipate, while renewed tightening of financial market conditions could have a greater negative impact on the U.S. economy,” New York Fed president noted.
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