WASHINGTON (Reuters) - New York Federal Reserve President William Dudley said on Thursday that as long as the U.S. economy continue to grow at an above trend pace, he would be in favor of another interest rate rise at the U.S. central bank’s upcoming meeting in March.
“We have above-trend growth, we have buoyant financial conditions, we still have an easy monetary policy and this is all taking place with a very large tax cut that’s going to provide additional stimulus,” Dudley said in an interview with Bloomberg TV when asked what it would take for him to support a rate rise at the Fed’s next policy meeting.
“As long as I am comfortable the economy continues to grow at an above-trend pace ... I’m probably going to be supportive of removing monetary policy accommodation,” he said.
Dudley also played down the impact of the recent stock market sell-off on the U.S. economic outlook, saying that so far the declines were “small potatoes” compared to the rise in equity valuations over the past few years.
Stocks in world markets remained on shaky ground on Thursday, with major U.S. stock indexes down around 2 percent, as U.S. bond yields earlier crept back toward four-year highs.
The Fed has forecast three rate rises this year and investors widely expect the central bank to lift borrowing costs again when it meets on March 20-21.
Dudley said the forecast of three rate hikes still seemed a “very reasonable projection” but added there was a potential for more.
“If the economy looks stronger as we go through the year, could that three turn out to be more? Perhaps,” he said.
Reporting by Lindsay Dunsmuir; editing by James Dalgleish