William Dudley on inflation, Fed tapering, dollar dominance

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The recent spike in U.S. inflation is likely transitory for now — but it could become more persistent in the coming years as more people return to work, said former New York Fed President William Dudley.

“I think that the scare right now is probably going to abate a bit as we go through the next year, but I think in the long run, are we going to see inflation … above 2%? I think the Fed is going to succeed in doing that,” Dudley told CNBC’s “Squawk Box Asia” Wednesday.

Inflation has been a major focus in recent weeks. Investors are worried that a quicker rise in consumer prices would prompt the Federal Reserve to hike interest rates earlier than expected. The U.S. consumer price index rose 4.2% in April from a year ago — the sharpest increase since September 2008.

The Fed had previously indicated that it’s willing to let inflation run above the 2% target for some time before raising rates.

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Dudley said…

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