Fed will be able to smoothly wind down aggressive policy-Dudley
NEW YORK, Sept 25
NEW YORK, Sept 25 (Reuters) - Winding down the Federal Reserve's unprecedented policy accommodation is feasible even with the U.S. central bank's swollen balance sheet, though there are bound to be unforeseen challenges when the time comes, a top Fed official said on Wednesday.
New York Fed President William Dudley, whose branch of the central bank handles its massive bond-buying program, said in a speech that there "will undoubtedly be communications and operational challenges and unexpected consequences" when the Fed eventually tightens policy.
But he said that an "exit from (this) unconventional set of policies is certainly feasible," especially given the Fed's relatively new ability to pay banks interest on the excess reserves they store at the U.S. central bank.
In his prepared remarks, Dudley did not comment specifically on when the Fed might start to reduce its $85 billion monthly asset purchase program, known as quantitative easing.
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