Fed's Dudley: strong dollar and cheap oil halt US growth; Euro rises on his comments
On Monday New York Federal Reserve President William Dudley said that a
stronger dollar is shocking for the economy, and
that lower oil prices exert a "meaningful drag" on the US economic growth because
of lower investment in the vibrant domestic energy industry.
At the same time, he
said he expects U.S. growth to keep on growing after a weak first quarter that
largely reflects "temporary factors," with the economy expanding at a
similar pace to 2014 and 2013. Dudley predicts the
unemployment rate could drop to 5% from 5.5% by the end of the year.
Meanwhile, the timing of a future interest rate hike remains uncertain.
"The timing of normalization will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated," Dudley said in prepared remarks.
His comments came after weaker than expected U.S. employment data released Friday prompted investors to push back expectations for a rate hike in the U.S. to the end of the year.
His comments also gave a boost to the euro which rose above the $1.10 level against the U.S. dollar.
