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Free AccessREPEAT: MNI: Fed's Williams And Dudley Comfortable With Infl
Repeats Story Initially Transmitted at 19:17 GMT May 4/15:17 EST May 4
--In Broadcast Interviews, Reiterated Fed Has A "Symmetric" 2% Infl Objective
By Sara Haire
WASHINGTON (MNI) - The FOMC's Wednesday statement caused speculation on
what the addition of "symmetric" might mean when discussing inflation
expectations running near the Committee's 2% objective, something two top
Federal Reserve officials explained on Friday was an indication of their
comfortability with allowing inflation to drift above target for some time.
San Francisco Fed Bank President John Williams and New York Fed chief Bill
Dudley said in separate, dueling televised interviews on CNBC and Bloomberg,
respectively, that inflation has been moving closer to the Fed's goal and it was
time to reiterate that the Federal Open Market Committee's objective is
"symmetric."
"Given that inflation has been below our target for a number of years, I
think it is important to reinforce that message that we think of 2% as the
midpoint, and I am personally comfortable with the fact that inflation may
overshoot that 2% for a while," Williams said in an CNBC television interview.
Meanwhile in a separate interview, Dudley brushed off the idea that the
added 'symmetric' was any cause for concern. He explained that as he has said a
number of times, that being "a little above 2% after being below for many years
is not a problem," and continued on to explain that the 2% was not a floor nor a
ceiling, despite the markets' voiced concerns.
Prior to this in a speech on April 18, Dudley addressed the idea of a
target inflation range being more practical considering inflation "will
fluctuate relative to its underlying trend," implying that even if the FOMC is
perfect in policy implementation, the inflation rate "will very rarely" be
precisely at 2%.
The reiteration that the Fed's objective remains symmetric would suggest
that at least a few members of the FOMC seem to be on board with allowing the
economy to run above trend for the time being, careful to monitor economic and
inflation developments closely as the year progresses.
Williams will be assuming the role Dudley will be retiring from shortly, so
their agreement on allowing inflation to fluctuate bodes well for the continuity
of the Fed leadership.
--MNI Washington Bureau; +1 212-800-8517; email: sara.haire@marketnews.com
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.