Fed’s Dudley – Cautious approach to rate hikes appropriate

New York Fed’s Dudley, while speaking in Connecticut, said a cautious and gradual approach to rate hikes is appropriate.

Key quotes

No fundamental change in my US outlook in recent months

Signs of softness in consumer and business spending

Low inflation expectations still cause for concern

PCE inflation to eventually return to 2% objective

Subdued wage growth suggests still slack in the labor market

Labor market healthy, but long-term unemployed still high

Sees us jobless rate falling to around 4.75% in 2016

Sees US growth of about 2% in 2016, above potential

Fed can use forward guidance, balance sheet, if needed