Fed's Dudley: Recovery Will Continue, Barring Large Shock
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Important sectors of the U.S. economy will continue to withstand the global slowdown, New York Federal Reserve President William Dudley said Friday.
Wall Street has been jittery this year amid fears that problems in Asia and Europe are washing ashore.
However, Dudley thinks low interest rates and a healthier banking system will prevent another U.S. recession, barring unforseen shocks.
"Expansions do not simply die of old age," Dudley said. "Rather, expansions end either because a significant inflation risk emerges that requires a sharp tightening of monetary policy, or the economy is adversely impacted by a large shock that cannot be offset by monetary policy in a timely manner."
"The good news is that the economy is more resilient to any shocks," he added. "Key sectors of the U.S. economy, such as the household sector, seem to be in good shape.
Also, conditions that led to the Great Recession in 2008 are materializing.
"The financial system is also clearly much stronger, with the banking system much better capitalized and with much larger liquidity buffers than in the years preceding the financial crisis," Dudley added.
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