Fed's Dudley Says Stock Volatility Hasn't Changed His Economic Outlook

02/07/18 10:41 AM EST
By Michael S. Derby 

Federal Reserve Bank of New York leader William Dudley said Wednesday the stock market's wild swings over recent days haven't changed his assessment of the economy and monetary policy.

"Having a bump like this has virtually no consequence in my view to the economic outlook," Mr. Dudley said at an event held by the European American Chamber of Commerce and Thomson Reuters in New York. "My outlook hasn't changed because the stock market is a little bit lower than it was a few days ago. It's still up sharply from where it was a year ago."

But he suggested central bankers should monitor the situation.

"If the stock market were to go down precipitously and stay down, then that would actually feed into the economic outlook, and that would affect my view for monetary policy," Mr. Dudley said. "So far this is a big story" in the press and for market participants, "but I don't think it's a big story at all for central bankers."

Stock prices have experienced wide swings since the release of U.S. jobs data Friday that was strong enough to suggest to some the Fed may move short-term interest rates up more than had been expected this year.

Fed officials have penciled in three rate increases for 2018. Wage gains data in the January jobs report suggested inflation may be ready to pick up, which rattled markets. Long-term bond yields also have been rising, in another sign markets are undergoing a shift after an extended period of strength.

Write to Michael S. Derby at michael.derby@wsj.com


(END) Dow Jones Newswires

February 07, 2018 10:41 ET (15:41 GMT)

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