Written with Caroline Salas Gage
William C. Dudley, president of the Federal Reserve Bank of New York, said the central bank won’t cut back record monetary stimulus too quickly when the economy begins to gain strength.
“If we were to see some good news on growth I would not expect us to respond in a hasty manner,” Dudley said in the text of remarks prepared for a speech in New York today.
Policy makers last month increased accommodation to boost an economy that central bankers said still faces “significant downside risks.” Fed officials voted to embark on their third round of asset purchases, agreeing to buy $40 billion of mortgage-backed bonds a month. They also extended its horizon for record-low interest rates through at least the middle of 2015.
Dudley said the Fed may have not used enough stimulus measures to support the recovery in the aftermath of the financial crisis.
“With the benefit of hindsight, monetary policy needed to be still more aggressive,” he said. “Consequently, it was appropriate to recalibrate our policy stance, which is what happened at the last” meeting of the Federal Open Market Committee.