January 13, 2010 / 11:50 PM / 8 years ago

Fed's Dudley: Need more vigorous recovery before rate hike

NEW YORK (Reuters) - A top U.S. Federal Reserve policy maker said on Wednesday that he would like to see a more vigorous economic recovery and a drop in the jobless rate before the U.S. central bank raises interest rates.

William Dudley, president of the New York Federal Reserve Bank, told PBS’ Nightly Business Report television program that continued banking problems and the decline in household wealth during the crisis pose obstacles to economic growth.

“I think it’s a recovery that isn’t as strong as we would like,” Dudley said according to a transcript of the interview.

The president of the New York Fed has a permanent voting seat on the U.S. central bank’s policy-setting panel. Asked what he would need to see before he would feel comfortable voting for an interest rate hike, Dudley said:

“I certainly need to see an economy that’s vigorous enough to bring the unemployment rate down, number one. And two, I would care about what’s going on in inflation... We’re doing very well on the inflation side. We’re doing not well at all on the employment side,” he said.

The Fed cut the federal funds rate -- the benchmark U.S. interest rate -- to near zero percent in December 2008.

The Fed has pledged low rates for “an extended period” and most analysts do not expect the Fed to raise interest rates until the second half of 2010.

Reporting by Kristina Cooke, Editing by Chizu Nomiyama

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