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"We have to see what unfolds," New York Fed
President William Dudley said in a speech that repeated cautious
optimism that the U.S. economy will continue to expand and that
inflation will begin to firm later this year.
Still, he said, the economy has further to go toward the central
bank's dual goals of full employment and 2-percent inflation.
The data will "hopefully" support a rate hike later this year,
Dudley said at the Bloomberg Americas Monetary Summit. But "the
timing of normalization remains uncertain because how the
economy evolves is also uncertain," he added.
Dudley, a permanent voter on U.S. monetary policy and a close
ally of Fed Chair Janet Yellen, repeated that the pace of
tightening will depend on how financial markets react.
The Fed is expected to raise rates by June at the earliest but
more likely in the second half of the year, according to
forecasts by economists and Fed officials.
The move is expected to reverberate through markets globally.
Dudley said it could create "significant challenges" for
emerging market economies, but that many of them are better
prepared for it now than a couple of years ago.
(Reporting by Jonathan Spicer and Daniel Bases; Editing by Chizu
Nomiyama)
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