Economy might be gathering strength a bit

Dudley on CNBC

  • Storms will make it very difficult to read economic data in next few months
  • In longer-term, storms tend to boost economic growth, expect to see that later this year. Timeline could be stretched if it’s more damaging
  • Will probably take down Q3 forecast ‘a touch’ on Harvey
  • Economy might be gathering strength a bit
  • I’m pretty confident growth will be above-trend going forward
  • I don’t see any reason not to taper balance sheet
  • Inflation is further below our target
  • It’s too soon to judge when we will hike again, but gradual path will continue
  • By late 2017 or early 2018, we will see benefits of rebuilding
  • We still believe if you make economy tight enough, we will get inflation
  • Could be seeing structural changes in economy that allow it to operate without inflation
  • The next 3-6 months will tell us more about inflation dynamics

Once again, Dudley didn’t say (as he previously had) that he expected to hike rates again this year. He did leave the door open to a hike late this year and was definitively upbeat but the market is having a hard time seeing the great growth he’s talking about.

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