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High hurdle to ramping up QE3: Fed's Dudley

Tuesday, July 02, 2013 - 02:00

July 2 - New York Fed President William Dudley sees a possibility of ramping up QE3 only if the economy gets in trouble. No reporter narration.

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***DUDLEY ROUGHCUT*** Soundbites from William Dudley, President of the Federal Reserve Bank of New York, who spoke at a luncheon hosted by The Business Council of Fairfield County at the Sheraton Stamford Hotel in Stamford, Connecticut. SOUNDBITE: WILLIAM DUDLEY, PRESIDENT, FEDERAL RESERVE BANK OF NEW YORK, (ENGLISH) SPEAKING: "I certainly wouldn't want to rule out raising the pace of asset purchases from the current 85. But what I was saying, I think, was more towards to lean against what's in that statement, was this idea that so called taper is hard-wired. It's not hard-wired. It very much depends on the economic news we're going to see. And if the scenario were to be diversed meaningfully from what we most expect, then I would expect the rate of asset purchases to be higher for longer." SOUNDBITE: WILLIAM DUDLEY, PRESIDENT, FEDERAL RESERVE BANK OF NEW YORK, (ENGLISH) SPEAKING: "We've gotten US banking system healthy relatively fast, especially compared to the health of banking systems elsewhere in the world. We were fairly aggressive in 2009 in forcing the banks to take on board new capital. We've been pretty tough-minded on the banks in terms of letting them pay out dividends, and doing shares repurchases, because we wanted them to bolster their capital so they can support, increase lending, which would support the economy. So, as a consequence of that, US banking system now is in actually really good shape with respect to capital. And so, as a consequence of that, credit conditions in the US are easing and that's supporting US economy." SOUNDBITE: WILLIAM DUDLEY, PRESIDENT, FEDERAL RESERVE BANK OF NEW YORK, (ENGLISH) SPEAKING: "A raise in short-term rates is very likely to be long ways off in time. Not only will it take considerable amount of the to reach the FOMC 6.5% unemployment rate threshold, but also the FOMC could wait considerably longer before raising short-term rates because these are the thresholds, not triggers." SOUNDBITE: WILLIAM DUDLEY, PRESIDENT, FEDERAL RESERVE BANK OF NEW YORK, (ENGLISH) SPEAKING: "Labor market still cannot be regarded as healthy. Numerous indicators, including the behavior of labor compensation, households assessments of labor conditions, they are all consistent with the view that there still remains a great deal of slack in the US economy."