NY Fed President Dudley Complains Unemployment is Too Low, Rate Hikes Needed

NY Fed President William Dudley is worried about the low unemployment rate. He thinks the Fed needs to be above neutral.

New York Fed President William Dudley will retire Monday. Current San Francisco Fed chief John Williams will take over.

He departs with one more gem: Dudley Foresees Need for Fed Rate Hikes to Slow the U.S. Economy.

“The federal funds rate will probably have to climb a little bit above neutral, because the unemployment rate is already -- from most people’s vantage points -- below a sustainable level of unemployment consistent with stable inflation,” Dudley told reporters Friday. “So, I think the move will be eventually to a slightly tight monetary policy.”

“I’m sort of expecting that the peak in the federal funds rate in this cycle will be lower than in past cycles, but I have quite a bit of uncertainty about that,” Dudley said during a conference call.

The unemployment rate is too low now, so we need to hike.

Last year he said consumers should "unlock" housing equity to boost the economy.

“The previous behavior of using housing debt to finance other kinds of consumption seems to have completely disappeared,” and people are leaving the wealth generated by rising home prices “locked up” in their homes.

“A return to a reasonable pattern of home equity extraction would be a positive development for retailers, and would provide a boost to economic growth.”

By the way, the Housing ATM is Back (But it won't work any better this time).

Dudley is a real gem. He will be missed for the comedy he provides.

Mike "Mish" Shedlock

Comments (21)
No. 1-21

Do these Fed governors have to publicly reveal their financial assets? What is in this clown’s personal portfolio?

Doesn’t matter much since he’s retiring, but it reveals where he put his money and if that matches where his mouth has been.


How the heck does Dudley know what the unemployment rate should be?

And, by which measurement method?

Mike Mish Shedlock
Mike Mish Shedlock


You know and I know that he doesn't know. And he does not know the neutral interest rate either. So how the hell does he know what "slightly" tight is? He doesn't. The only use for Dudley is humor.


Just wondering did his comment come before or after the precious metals got hammered or did it have more to do with gold having to drop to maintain its near perfect correlation to the Chinese currency?


And without any sense of irony we make fun of tribal people who went to shamans for advice or tried to read tea leaves. We've come a long way, baby.

At least with the soothsayers of old the readings were unpredictable. To be a Fed priest only a willingness to tell people to incur more debt and favor large banks is required. People used to try to predict the future, now we try to claw future earnings into the present with fake math!