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23 Sep 2013
Fed watch: Dudley and Lockhart continue dovish tone.
FXstreet.com (London) - Fed watching continued today with two Fed presidents speaking at separate events. Both echoed the dovish tone taken by Ben Bernanke on the FOMC’s decision not to taper the Fed’s monthly asset purchase programme of USD85bn.
Speaking at Fordham University, Federal Reserve Bank of New York President William Dudley repeated the stance taken by Ben Bernanke last week that the US economy is not yet strong enough for the Fed to taper its asset purchases. “While significant progress has been made since the end of the recession, there remain a number of headwinds that have offset the improvement in the underlying fundamentals. As a result, we have yet to see any meaningful pickup in the economy’s forward momentum.”
Dudley added that: “Decisions on the pace of asset purchase and forward guidance must be based on what is most appropriate to achieve our dual mandate objectives of maximum sustainable employment in a context of price stability.”
He rounded off his speech by concluding that: “it is important to recognise that the financial crisis generated significant headwinds that are only slowly abating. We must push against these headwinds forcefully to best achieve our objectives.”
Labour market worries
Speaking at a conference on creative leadership, Atlanta Federal Reserve President Dennis Lockhart echoed Dudley’s concerns for the strength of the US recovery, and that the performance of the labour market is a worrying trend pointing towards lower potential for economic growth.
Asking “Is America losing its economic mojo?”, Lockhart commented: "Lower participation may mean somewhat lower potential for the economy. That's a concern."
He followed in the monetary activist footsteps of Ben Bernanke by saying: "Monetary policy can also play a critical role in creating the most favorable conditions for other policy actions to do their work.”
Speaking at Fordham University, Federal Reserve Bank of New York President William Dudley repeated the stance taken by Ben Bernanke last week that the US economy is not yet strong enough for the Fed to taper its asset purchases. “While significant progress has been made since the end of the recession, there remain a number of headwinds that have offset the improvement in the underlying fundamentals. As a result, we have yet to see any meaningful pickup in the economy’s forward momentum.”
Dudley added that: “Decisions on the pace of asset purchase and forward guidance must be based on what is most appropriate to achieve our dual mandate objectives of maximum sustainable employment in a context of price stability.”
He rounded off his speech by concluding that: “it is important to recognise that the financial crisis generated significant headwinds that are only slowly abating. We must push against these headwinds forcefully to best achieve our objectives.”
Labour market worries
Speaking at a conference on creative leadership, Atlanta Federal Reserve President Dennis Lockhart echoed Dudley’s concerns for the strength of the US recovery, and that the performance of the labour market is a worrying trend pointing towards lower potential for economic growth.
Asking “Is America losing its economic mojo?”, Lockhart commented: "Lower participation may mean somewhat lower potential for the economy. That's a concern."
He followed in the monetary activist footsteps of Ben Bernanke by saying: "Monetary policy can also play a critical role in creating the most favorable conditions for other policy actions to do their work.”