Dudley Looks at Present, Past, and Future of Fed Policy as He Accepts NYABE Award

William C. Dudley, known to everyone as Bill, came to the NYABE’s event honoring him for lifetime achievement in business economics in high spirits. It’s clearly an honor to be the 48th annual recipient of the William F. Butler Award, presented annually to a distinguished business economist to honor leadership in the field. And he was clearly happy to receive it.

Notably the 47th annual award was given to Janet Yellen, former Federal Reserve Chair and former Treasury Secretary with whom Bill worked closely from 2009 to 2018 as president of the New York Fed, and third-in-Fed command as vice-chair of the FOMC, the Fed’s policy-making Federal Open Market Committee.

As fate would have it, I had the honor of doing a fireside chat with him just two hours before the Fed wrapped up the second day of its September meeting. Spoiler alert: the Fed did cut its key rate by 25bps as widely expected. Of course you know that by now.

What’s interesting after the fact is to hear what Bill had to say about what the Fed would do, and why they would do it, especially now when there is a debate over the FOMC’s decision to look past well-above target inflation and do its “risk management” cut due mainly weaker jobs growth when it’s not clear if this is a demand- or supply-driven slowdown.

Another spoiler alert: Bill got all of the above right. When I asked him what he would do, what he would vote for if he were still at the Fed now, he foresaw that no matter what he might want to do with the key rate, and no matter what other individual members of the FOMC might want to vote for now, the majority would bow to Chair Powell and vote for the move he wanted to take. As for the one dissenting vote for a 50bps cut, he saw that kind of possibility too. And predicted the protestor would stand alone.

So sit back and relax and enjoy the what Bill shared with his glued-to-his-words audience. And then hear the pointed questions they asked at the end.

Tani Fukui is the president of the NYABE and she kicked off the event, introducing Bill, mentioning his infamous trip to Queens as she did so, and handing off the baton to me. As we got the ball rolling, how could I resist asking him what happened that day?