Federal Reserve's William Dudley sees inflation staying low despite rise in hiring

Chris Papadopoullos
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William Dudley remains dovish on interest rates
Unemployment can continue falling to unusually low levels without risking dangerously high inflation, Federal Reserve policymaker William Dudley said yesterday.

Inflation has been running below the Federal Reserve’s target for more than two years, meaning there may be more room than expected to allow growth to surge before any rate rises.

Dudley is already considered a dove on monetary policy, as he has not traditionally argued for early tightening of interest rates, so his remarks are unlikely to have a major impact on markets.

Speaking at a Bloomberg event in New York he also noted that the strength of the dollar could keep dragging inflation down, by lowering the price of imported goods. In turn this will further reduce pressure on the Fed to hike interest rates.

Meanwhile, housing market activity dipped in August after a series of positive month-on-month growth figures.

Sales of existing homes – a figure which excludes new builds – fell 1.8 per cent on the month to 5.05m.

“On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding” said the National Association of Realtors’ economist Lawrence Yun.

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