Tags: Fed | Dudley | US | Economy | Status | Unsatisfactory

Fed’s Dudley: US Economy’s Status ‘Wholly Unsatisfactory’

Tuesday, 19 Oct 2010 09:57 AM

Federal Reserve Bank of New York President William Dudley said slowing growth, “weak” job creation and declining inflation add up to a “wholly unsatisfactory” U.S. economy.

“Given the outlook that the upturn appears likely to strengthen only gradually, it will likely be several years before employment and inflation return to levels consistent with the Federal Reserve’s dual mandate” for stable prices and maximum employment, Dudley said in the text of remarks today at a press briefing on the regional economy at the New York Fed.

Central bankers are considering measures to stimulate growth in the U.S., and Fed Chairman Ben S. Bernanke said last week that a second round of unconventional monetary easing may be warranted because of low inflation and an unemployment rate that is holding near 10 percent.

“The current situation is wholly unsatisfactory,” Dudley said. He didn’t discuss details of potential Fed actions such as additional large-scale Fed purchases of Treasuries.

Policy makers can support the economy through “critical reforms that make the financial system safer and accommodative monetary policy” that lowers mortgage costs and makes it more attractive for businesses to invest and create jobs, said Dudley, 57, who serves as vice chairman of the Federal Open Market Committee.

After lowering interest rates almost to zero and buying $1.7 trillion of securities, the Fed is debating expanding its balance sheet by purchasing Treasuries and strategies for raising inflation expectations, according to the minutes of the FOMC’s Sept. 21 meeting.

While the National Bureau of Economic Research said last month that the worst U.S. recession since the Great Depression ended in June 2009, economic growth slowed to an annualized 1.7 percent rate in the second quarter from 3.7 percent in the first period. The growth figures are adjusted for changes in prices; nominal gross domestic product doesn’t adjust for inflation.

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Federal Reserve Bank of New York President William Dudley said slowing growth, weak job creation and declining inflation add up to a wholly unsatisfactory U.S. economy. Given the outlook that the upturn appears likely to strengthen only gradually, it will likely be...
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2010-57-19
Tuesday, 19 Oct 2010 09:57 AM
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