Key commentaries from Fed’s Dudley

U.S. Federal Reserve’s one of the most influential policymakers, New York Fed President William Dudley speaking at a joint news conference in Bali with officials from Bank of Indonesia sent mixed signals in regard to rate hike path from the Fed. However, most parts of his speech were dovish in nature.

He suggested that negative shocks to the economy are more likely than the positive ones largely due to the unknown fallouts from the UK referendum, a strong dollar and because it was safer to delay rate hikes, however, he said can’t rule out better than expected economic performance by year end.

A permanent voter as the head of the New York Fed, Mr. Dudley said, All three of these reasons - evidence that U.S. monetary policy is currently only moderately accommodative, the fact that U.S. financial conditions have been influenced by economic and financial market developments abroad, and risk management considerations - argue, at the moment, for caution in raising U.S. short-term interest rates," Only hawkish part of his speech was when he said that it would be premature to rule out a rate hike this year as economy may continue to pose strong recovery.

Fed could consider a hike either in September or December if one hike is to be delivered this year. The December meeting is most likely as it would remove the uncertainties of the election.