Former New York Fed President William Dudley: Inflation Has Missed Target for Years, Fed’s Credibility at Risk

Odaily News: Former New York Fed President William Dudley has warned that the Federal Reserve’s credibility as an “inflation fighter” is at risk of being lost, given its long-standing failure to achieve the 2% inflation target. “We have been above the Fed’s inflation target for over five consecutive years,” Dudley said. “And there is a risk that inflation expectations could eventually become unanchored.”

His comments highlight the challenges facing newly appointed Fed Chair Kevin Warsh. Warsh takes the helm at a time when the Consumer Price Index (CPI) recorded its largest single-month increase since 2023, and following sustained sharp criticism from Trump over Powell’s failure to ease monetary policy. Dudley believes that Warsh’s appointment, coupled with Trump’s pressure for rate cuts, further exacerbates the credibility challenges facing the Federal Reserve. (Jin Shi)