Fed's Dudley: QE3, Low Rates Will Stick Around

NEW YORK CITY-Throwing some cold water on market fears that the Federal Reserve could soon taper off its third round of quantitative easing, the central bank’s New York president said Thursday that the Fed would maintain the status quo on QE3 if the economic recovery doesn’t keep pace with projections. At a press briefing here Thursday morning, William Dudley, president and CEO of the Federal Reserve Bank of New York, also said a near-term increase in interest rates was unlikely.

“Some commentators have interpreted the recent shift in the market-implied path of short-term interest rates as indicating that market participants now expect the first increases in the federal funds rate target to come much earlier than previously thought,” Dudley said in prepared remarks. Such an expectation, he added, would be “quite out of sync” with both recent statements by the Federal Open Market Committee “and the expectations of most FOMC participants.”