The Strategist

Dudley from the Federal Reserve Bank of New York expects US GDP growth and inflation

08/11/2017 - 12:42

President of the Federal Reserve Bank of New York, William Dudley, voiced a positive outlook for the US economy, the US labor market and consumer price dynamics. He believes that the least protected sections of the country's population can count on support.

"According to our forecast, we expect a continued moderate economic growth, further improvement in the labor market situation and inflation in the medium term to a target of 2%.

A stronger labor market is perhaps the best way to improve the economic well-being of the majority of Americans, especially of those who suffer most as a result of economic shocks. "

It is expected that the Federal Reserve System will announce the beginning of a reduction in assets on the balance sheet, which now amounts to $ 4.5 trillion, at a meeting next month. This program was launched after the financial crisis in order to stimulate the economy and reduce long-term interest rates. Since December 2015, the key rate of the Federal Reserve has been increased already four times. The chances that this year it will be raised again are one to three, after the government published reports on the labor market. Data for recent months indicate a slowdown in the growth of wages and inflation in the United States.

The President of the Federal Reserve Bank of New York, William Dudley, said that the "relatively modest" wage growth and the decline in the unemployment rate, which was 4.3% in July, in part probably reflects the fact that "productivity growth was rather sluggish historically".

The US Federal Reserve System announced advisability of initiating a "gradual and predictable" reduction in assets on the balance sheet earlier this month. The President of the Federal Reserve Bank of San Francisco, John Williams, believes it is right to start reducing the balance of the Fed's assets in the fall and to gradually increase the monthly volume of its reduction in the future. The official is one of the representatives of the Open Market Committee of the Federal Reserve System (FOMC), which has the right to vote in decisions on monetary policy in 2017.