An influential Federal Reserve policymaker on Friday unscored his commitment to accommodative policies, saying the labor market is not yet healthy and inflation should firm in the months ahead.
New York Fed President William Dudley's speech was very similar to one he gave Monday in which he strongly defended the U.S. central bank's bond-buying program and said the economic recovery still needs support.
On Friday, he pointed to conflicting information on the U.S. labor market, which was badly bruised by the Great Recession but has improved in recent years, with unemployment now down to 7.3 percent from a 10-percent peak in 2009.
"Job loss rates have fallen, but hiring rates remain depressed at low levels. Taken together, the labor market still cannot be regarded as healthy," Dudley, a permanent voter on Fed policy and a close ally of Chairman Ben Bernanke, said according to prepared remarks at Syracuse University.
"Numerous indicators, including the behavior of labor compensation, are all consistent with the view that there remains a great deal of slack in labor markets," he said.
As for currently soft inflation, Dudley said he expects it to "firm further in the months ahead" and move toward the Fed's 2-percent goal. Still, he said, the Fed "recognizes that inflation persistently below 2 percent could pose risks to economic performance."
(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)