U.S. ECONOMICS: NY Fed Governor Dudley Sees Encouraging Signs In Economy
Speaking to an audience at CUNY Queens College today, NY Fed Governor William Dudley acknowledged the sluggish pace of economic growth in 2013, but sounded much more hopeful that improved global growth prospects coupled with increased business investment from the private sector will result in "more substantial improvement in labor market conditions and a gradual updrift in inflation back towards the FOMC's target rate."
Dudley acknowledged that fiscal policy has been a significant drain on economic growth and the "substantial decline of the labor force participation" was largely behind the drop in the unemployment rate from the peak 10% jobless rate in 2009. But signs of improvement are evidenced by the increase in the 3 month moving average for job growth over a 200,000 pace, and GDP annual growth rate over 2% for 2013, he said.
Although Dudley stops short of suggesting what his upbeat economic forecast will have on future Fed policy (the NY Fed Governor is a permanent voting member), the negative, albeit temporary, reaction in the bond market is indicative of the fact that the Fed likely acknowledges improved economic conditions will justify a tapering of asset purchases in early 2014.
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