FOREX - GOLD - PREDIKSI

 STAMFORD, CONN. (MNI) 

William C. Dudley, president of Federal Reserve Bank of New York. (Photo credit: Wikipedia)

A top Federal Reserve official Tuesday attempted to quell market concerns the central bank may be scaling back its support for the economic recovery prematurely, saying an increase in the pace of its bond buying is possible if the economic outlook deteriorates.
"The Fed has said we could raise or lower the pace of asset purchases," William Dudley, New York Federal Reserve Bank president and a close ally of Fed Chairman Ben Bernanke, said in response to questions following a luncheon speech.
He reiterated that, if the economic outlook "surprised to the downside, if things were really, really weak," then "I would expect the rate of asset purchases would be higher for longer."
Asked about his mention in his prepared remarks that "asset purchases would continue at a higher pace for longer" should "economic circumstances diverge significantly from the FOMC's expectations," Dudley said he was being "deliberately ambiguous." The phrase can be interpreted as referring to the current "higher" rate of $85 million in monthly bond buying or an even faster pace.
His speech again described in detail how the Fed is keeping its options open on its eventual "tapering" of bond purchases and slimming of its bloated balance sheet.
The New York Fed chief said the Fed's rate of bond buying "depends on the outlook rather than the calendar."
Financial markets have shuddered in the days following the Fed's June 18-19 policy meeting, when Bernanke said that if the economic data ahead comports with the Fed's current outlook, the Federal Open Market Committee could begin the process of scaling back its asset purchases later this year.
Dudley repeated that "a strong majority of FOMC participants no longer favor selling agency MBS securities during the monetary policy normalization process.
"This implies a bigger balance sheet for longer ... and continuing support for mortgage markets going forward."
Most of his colleagues "currently do not expect short-term rates to begin to rise until 2015," he added.
Dudley told his audience that the Fed's "aggressive" policy action is supporting the broader economy's recovery by juicing credit markets.
But he acknowledged that, during the downturn, "we were at times too optimistic about the economic outlook."
He went on to muse that, "[w]ith the benefit of hindsight, should policy have been even more accommodative, even sooner than it was? Yeah, I think that would be fair."
Dudley also said that, despite total inflation falling short of the Fed's 2% goal, "inflation expectations are still pretty firmly anchored.