william dudley

Dudley: Fed was too soft in response to failing housing sector

October 15, 2012
437 Views

william dudley

Fed official criticizes Fed’s actions, offers forecast

In an address to the National Association for Business Economics in New York City today, William Dudley, President of the Federal Reserve Bank of New York spoke frankly about the recent and ongoing financial crisis, opining that the Fed’s monetary policy was not as aggressive as it should have been given all of the factors of the flailing economy.

Dudley notes that despite policy being on par with historical standards, it was weak because of a limping housing sector which is traditionally the primary means of lower rates that influence the economy. With this impaired financial vehicle, Dudley says the Fed did not act aggressively enough to stimulate housing, and despite low rates, the stimulus wore off quickly as fewer consumers were induced to spend money.

Growth was further impaired by the low interest income of savers, and combined with failed housing, these factors were why he supported that third round of asset purchased adopted last month which he called a more aggressive move. Although this move is more in line with Dudley’s push for more rapid and aggressive action, he says the U.S. economic outlook for 2013 remains “somewhat cloudy,” and that should the economy pick up faster than anticipated, the Fed does not intend on responding in a “hasty manner” until it is confident that the recovery was securely established.

Despite unsure comments as to the 2013 outlook, Dudley notes the economy could bounce back more quickly if the automatic spending cuts and tax hikes at the end of the year (the fiscal cliff) are avoided, and if the Eurozone resolves their ongoing debt crisis.

In his speech, Dudley added that the Fed will be closely monitoring whether its programs create asset bubbles, or other potential consequences, and says fears of inflation because of the programs were “misplaced,” a comment some have already publicly disagreed with.

Advertise with The American Genius

Full transcript of the speech:

health-hazards
Like any electronics, there are best practices for use With the increasing popularity of tablet devices, many are looking beyond the novelty of apps and the usefulness of the devices, and digging deeper into how people's good and bad habits are forming around the use of the devices. Much like…
stress
I’m sure that you’ve heard the old adage, “What doesn’t kill you makes you stronger.” Even though I’m 100% certain that this adage existed well before the current barrage of short sales, it definitely serves to underscore the stress associated with processing and negotiating a short sale. Why are short…

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Leave A Comment