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US economy looks good but Fed remains cautious: Dudley

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US economic conditions are "mostly favourable" yet the Federal Reserve remains cautious in raising interest rates because threats loom, New York Fed President William Dudley said on Monday.

[NEW YORK] US economic conditions are "mostly favourable" yet the Federal Reserve remains cautious in raising interest rates because threats loom, New York Fed President William Dudley said on Monday.

Mr Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen, repeated his views in a speech, saying "policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated."

Addressing a conference at the New York Fed, he repeated he was confident that too-low inflation would rise to a 2 per cent goal over the next few years, and that "economic conditions have finally warranted the start of US monetary policy normalization."

The Fed raised rates modestly from near zero in December, its first policy tightening in nearly a decade. Most economists predict it will move again in June.

REUTERS

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