William Dudley


Last quote by William Dudley

Incentives shape behavior, and behavior drives culture.
Mar 21 2017
William Dudley has most recently been quoted in an article called Fed's Dudley, citing Wells, calls for better bank incentives. William Dudley said, “Incentives shape behavior, and behavior drives culture.”. William Dudley has been quoted a grand total of 50 times in 36 articles.
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William Dudley quotes

The crisis occurred in part because there were some real problems in terms of the financial system. Banks didn't have sufficient capital, they didn't have enough quality capital, they didn't have sufficient liquidity buffers.

International developments clearly affect international outcomes and financial stability within each of our borders. These international linkages have become more important over time.

It is challenging for the official sector, market participants, and members of the public to effectively analyze these markets, understand the sources and risks of flash events, and evaluate how liquidity is changing.

If the incentives are wrong and accountability is weak, we will get bad behavior and cultures.

That's quite different than saying there is this urgency to tighten policy aggressively.

I think if the economy continues to evolve along the path we expect, I'd expect we'll be raising interest rates relatively soon.

Inflation is a little below our target, rather than above our target, so I think we can be quite gentle as we go in terms of gradually removing monetary policy accommodation.

A risk management approach to monetary policy would suggest that the more concerned one is with the effectiveness of these policies at the zero lower bound, the more cautious one would be in the process of removing accommodation.

The tide has begun to turn. For the first time in quite a while, we are seeing gains in middle-wage jobs actually outnumber gains in higher- and lower-wage jobs nationwide.

In the past, the city has counted on job growth from Wall Street to fuel economic growth during recoveries and expansions. This time around, however, job gains in the securities industry have been quite meager. Is picking up much of the slack created by the softness of the securities industry.

Thus, when I reiterate that U.S. monetary policy is data dependent, that includes not just the information gleaned from important economic releases such as payroll employment and retail sales, but also how financial market conditions react to economic and financial market developments in the global economy.

The housing bust created a large housing supply overhang and a large number of households that were underwater on their mortgages. Households needed to repair their balance sheets and bring down their debt service burdens to more manageable levels.

If the upcoming information validates my view of the outlook, then U.S. monetary policy will need to move at a faster pace than implied by futures prices to a more neutral posture as the labor market tightens further and U.S. inflation rises". The market didn't appear to be giving much weight to the possibility that the economy could grow faster than expected.

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.

Seeing "evidence of deep-seated cultural and ethical failures at many large financial institutions.

With uncertainties about the outlook and inflation being lower than desired, it allows us to be a little more patient. The so-called Brexit vote is among the "clouds on the horizon" for the U.S. economy.

Clearly looking back a few days ago I think there's a pretty strong sense among FOMC membership that the market was not putting a sufficient probability (on the) June or July meeting.

If I am convinced that my own forecast is sort of on track, then I think a tightening in the summer, the June-July time frame is a reasonable expectation.

We're conducting policy on the basis of imperfect information but that's the information that we have at the time. So it's like you're driving on the road in a storm. You're looking out the windshield, you don't have a perfect view but you have a view and that's the basis for the decisions you make at the time.

Obviously, this is difficult to manage because it's a big, complex economy so I would not be surprised if there were a few bumps...but I think that I'm quite optimistic that this transition can be managed.

If things were to turn in a surprising direction and the outlook in the U.S. were to deteriorate sharply, I think there are a lot of things that we would do long before we would really think about moving to negative interest rates. So to me, that's not really something that should be part of the conversation right now.

The household sector looks much better positioned today than in 2008 to absorb shocks and continue to contribute to the economic expansion.

Given that the labor market still appears to have some excess slack and inflation is below the Federal Reserve's objective, monetary policy is appropriately still quite accommodative despite the advancing age of the expansion.

But its sheer age does not mean that the risk of recession is "edging higher,". Since the possibility is low that a significant inflation risk would emerge over the near term, this means that the main danger facing the current expansion is the risk of large, adverse shocks.

So if those financial conditions were to remain in place by the time we get to the March meeting, we would have to take that into consideration in terms of that monetary policy decision.

It's a touch softer, maybe, than what people were expecting, but I wouldn't put a lot of weight on it in terms of how it would affect my economic outlook.

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