The head of the new York fed urged to make rules Finance USA more flexible

The head of the new York fed urged to make rules Finance USA more flexible

At the Federal reserve Bank of new York believe that the U.S. economic slowdown was the result of inflexible policies and a wrong response to the crisis.

WASHINGTON, 15 Oct. The head of the Federal reserve Bank (FRB) of new York William Dudley called on the U.S. government to think about changing the rules of financial market regulation — in his words, otherwise the Federal reserve system (the fed) will continue to be difficult to respond to the challenges of the modern economy.

Dudley, speaking in Brukingsa Institute on Thursday, called for raising the fed’s base rate, noting that “one-time rate increase is not likely relevant, because it is ensured by many factors, including changes in budget and tax policy, financial evolution.”

In this regard, he urged “to revise outdated rules”. “I think the slowdown (the economy — ed.) was the result of how we react to the crisis, monetary policy was not flexible. The consequences can lead to a deeper crisis and recession”, he added.

So “the fed should not be a slave to mathematical formulas,” he concluded, however, specific proposals have not sounded.

The fed last raised the base rate 29 June 2006. In 2007-2008, the regulator gradually reduced rate until it reached a 0-0,25% in December 2008. After the fed meeting in September, which once again kept the rate, noted a moderate increase in economic growth and the improvement of the situation on the labour market. However, the unemployment rate in the US has not changed, and inflation remains below the target level of 2%, in particular due to lower energy prices.

Professor at Stanford University John Taylor, who participated in the discussion, noted that the fed “now not even at a crossroads, and hit an intersection with ten roads, don’t know which one to choose, and therefore walks in a circle”.