Fed’s Dudley ‘hopeful’ on recovery; Plosser calls for capping QE

Wednesday, 20 November 2013 10:21 - - {{hitsCtrl.values.hits}}

REUTERS: Top Federal Reserve officials from opposite sides of the policy spectrum pointed to improvement in the US economy on Monday,

adding more weight to the notion that the central bank is getting close to reducing the pace of its monthly asset purchases. William Dudley, President of the Federal Reserve Bank of New York and one of the staunchest supporters of the Fed’s easy-money policies, cited labour market improvements and stronger-than-expected growth in the third quarter as signs of optimism for the US economic recovery. “I have to admit that I am getting more hopeful,” Dudley, a permanent voter on the Fed’s policy-setting committee, told students and professors at Queens College in New York. “Not only do we have some better data in hand, but also the fiscal drag, which has been holding the economy back, is likely to abate considerably over the next few years at the same time the fundamental underpinnings of the economy are improving.” The Fed has held interest rates near zero since 2008 and has been buying $ 85 billion in Treasury and mortgage bonds each month for more than a year to boost investment, hiring and growth. In separate remarks, Philadelphia Fed President Charles Plosser, an inflation hawk and critic of Fed stimulus spending, said the central bank should set a fixed dollar amount on its bond-buying program and end the purchases when that amount is reached. Plosser also pointed to improving economic conditions, including better-than-expected hiring, and said the Fed missed an opportunity to begin scaling back purchases in September.