March 6, 2014 / 2:45 PM / in 4 years

Dudley says threshold high for changing taper plans

March 6 (Reuters) - The U.S. economic outlook would have to change substantially for the Federal Reserve to alter the pace at which it is winding down asset purchases, a top U.S. central banker said on Thursday.

While growth is likely to quicken this year, the threshold for changing course on stimulus withdrawal is “pretty high,” said New York Fed President William Dudley during an event hosted by The Wall Street Journal.

“The outlook would have to change in a material way relative to my expectation,” he added.

The Fed this year started winding down five years’ worth of unprecedented accommodative policies meant to fight the 2007-09 recession and foster a stronger recovery. That means the central bank will eventually stop buying trillions of dollars worth of bonds and holding overnight interest rates at zero.

But Dudley said economic headwinds are likely to persist for some time and added that the U.S. central bank is still a long way from raising overnight interest rates.

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