New York Fed president William Dudley expects the Fed to proceed with its asset reduction plan at the September FOMC meeting.

Dudley is upbeat on economy’s underlying trajectory and claims Hurricanes May Have Temporary Effect on Hike Timing.

Federal Reserve Bank of New York President William Dudley said back-to-back hurricanes in the third quarter could temporarily influence the timing of the next interest-rate increase, although above-trend growth does warrant continued gradual rate hikes.

The Fed is expected to announce the start of a gradual process to shrink its $4.5 trillion balance sheet at its Sept. 19-20 meeting in Washington while keeping rates on hold amid a spate of disappointingly weak readings on inflation. U.S. central bankers hiked in March and June, and in June forecast they would raise a third time this year to a range of 1.25 percent to 1.5 percent.

“It’s too soon to judge exactly the timing of when the next rate hike might occur, but I think the path is still clear that short-term rates are going to move gradually higher over time,” he said. While he was marking down his third-quarter growth forecast “a touch” and the storms would affect incoming economic data over the next few months, he was otherwise upbeat on the economy.

“I’m pretty optimistic the expansion’s going to continue. I’m pretty confident it’s going to continue at an above-trend pace, and that’s why I think that as time passes, the Federal Reserve will continue to gradually remove monetary policy accommodation.”

NY Fed President Wants Consumers to Tap Home Equity

Please recall my August 14 article NY Fed President Wants Consumers to Tap Home Equity: Didn’t We Try That Before?

I don’t think homeowners in Houston will be tapping home “equity” anytime soon.

“The good news is that, while the current expansion is quite old in chronological terms, it is still relatively young in terms of the health of household finances,” Dudley said in a speech to the National Retail Federation.

Dudley is clueless at best. Consider this idiotic statement: “Fed’s Dudley: Hurricanes will boost economic activity over the long run

Mike “Mish” Shedlock