Fed’s Dudley Gives Dovish Speech in China

This is not a great revelation. Anyone with a mind for finance could clearly see the force by which deflationary pressure have been ravaging throughout the globe. Finally, some of the Fed heads have taken notice and have been easing back on their injurious rhetoric.

“On balance, I am somewhat less confident than I was before,” Dudley said in remarks prepared for a speech Tuesday in the Chinese city of Hangzhou. “Partly, this reflects my assessment that uncertainty to the outlook has increased and that downside risks have crept up.”

“At this moment, I judge that the balance of risks to my growth and inflation outlooks may be starting to tilt slightly to the downside,” Dudley said. “The recent tightening of financial market conditions could have a greater negative impact on the U.S. economy should this tightening prove persistent.”

“Tighter financial conditions abroad do spill back into the U.S. economy, and policy makers must take this into account in their assessment of appropriate monetary policy,” he said. “Of course, this does not mean that we will let market volatility dictate our policy stance. There is no such a thing as a ‘Fed put.’ What we care about is the country’s growth and inflation prospects, and we take financial market developments into consideration only to the extent that they affect the economic outlook.”

This, of course, will lend to the prevailing notion that the Fed will stand down during the March meeting, perhaps even offering succor to those in need of conciliatory dovish Fed jargon.