Back
21 Apr 2015
Fed Vice-Chair Dudley reiterates higher rates likely this year – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, shares the key comments from Fed Vice-Chair Dudley’s speech, and further maintains a bullish outlook on the US economy.
Key Quotes
“The US dollar has strengthened modestly in the Asian trading session as it continues to consolidate at higher levels over the past month. The US dollar has derived modest support overnight from comments by Fed Vice-Chair Dudley who reiterated that “I believe that growth prospects for the US economy over the remainder of 2015 will improve” which will warrant raising interest rates in 2015.”
“However, he added that he was “not reasonably confident right now” that inflation will move back to its 2.0% objective over the medium-term. He also cautioned that “while I am relatively optimistic about the growth outlook for 2015, I also must acknowledge that there are some significant downside risks”.”
“According to Fed staff estimates the stronger US dollar could reduce growth by 0.6 percentage points this year, and the slowdown in business investment following the drop in oil prices “will undoubtedly exert a meaningful drag on economic activity”.”
“On a positive note he highlighted that “corporate sector fundamentals are exceptionally good” and that “the consumer has plenty of room to run”.”
“We continue to expect the US economy to begin to rebound following weak growth in Q1 supporting a stronger a US dollar.”
“Weakening growth momentum outside of the US which is prompting looser monetary policy by overseas central banks has also been important driver of the stronger US dollar.”
Key Quotes
“The US dollar has strengthened modestly in the Asian trading session as it continues to consolidate at higher levels over the past month. The US dollar has derived modest support overnight from comments by Fed Vice-Chair Dudley who reiterated that “I believe that growth prospects for the US economy over the remainder of 2015 will improve” which will warrant raising interest rates in 2015.”
“However, he added that he was “not reasonably confident right now” that inflation will move back to its 2.0% objective over the medium-term. He also cautioned that “while I am relatively optimistic about the growth outlook for 2015, I also must acknowledge that there are some significant downside risks”.”
“According to Fed staff estimates the stronger US dollar could reduce growth by 0.6 percentage points this year, and the slowdown in business investment following the drop in oil prices “will undoubtedly exert a meaningful drag on economic activity”.”
“On a positive note he highlighted that “corporate sector fundamentals are exceptionally good” and that “the consumer has plenty of room to run”.”
“We continue to expect the US economy to begin to rebound following weak growth in Q1 supporting a stronger a US dollar.”
“Weakening growth momentum outside of the US which is prompting looser monetary policy by overseas central banks has also been important driver of the stronger US dollar.”