New York Fed Prez Hints at September Rate Hike
William Dudley, the president of the New York Federal Reserve, indicated today that the Fed might not raise interest rates until September. The note of caution came despite other statements saying the economy's lukewarm first quarter performance was something of a fluke mostly attributable to bad weather and that growth should tick up soon. Dudley expects GDP to have grown by 1%in the first quarter, down from 2.2% in 4Q14. Today's speech in New Jersey followed Friday's lackluster jobs report, which in part led Dudley to say the current recovery has been "disappointing compared to historical patterns."
Speaking of bad patterns, the Fed estimated that winter weather was 20% to 25% more severe than average in affected regions. By mentioning that, the strong dollar's "shock" to the economy and consumer wariness, Dudley seemed to indicate what many economists have predicted: that interest rates will remain near zero beyond June, when a hike had been widely expected, and up to the Fed's September meeting.[MW]