Ex-Fed's Dudley says US recession likely, but probably will not be severe

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Sharecast News | 03 Jan, 2023

An economic recession in the US, while likely, would probably not be severe, a former top Federal Reserve official reportedly said.

Indeed, according to him, the Fed could subsequently end the downturn by easing policy.

In remarks to Bloomberg Surveillance, the former head of the Federal Reserve Bank of New York, William Dudley, said: "A recession is pretty likely just because of what the Fed has to do.

"But what's different this time I think is that if we have a recession, it's going to be a Fed-induced recession and the Fed can end the recession by subsequently easing monetary policy."

According to Dudley, the Fed needed the unemployment rate to rise enough so that wage inflation decreased back to a level compatible with its 2% inflation target.

Dudley went on to add: "I don't think that there's a big risk of a financial-instability cataclysm that pushes the economy into a deep recession."

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