New York Fed President William Dudley said that three or four rate hike is a “reasonable expectation” for 2018. And, “as long as inflation is relatively low, the Fed is going to be gradual.” However, “if inflation were to go above 2 percent by an appreciable margin”, “the gradual path might have to be altered.”

Nonetheless, for now, “the market understands that more than four is quite unlikely, because that would no longer be a gradual path of monetary policy tightening.” He added that ” the market sort of sees three as possible and four as possible, but five or six seems to be quite unlikely.”

Regarding trade war with China, Dudley said the US has “legitimate issues” with China over trade. However, “if trade barriers go up, it’s bad for the U.S. economy. You’re going to have more inflation, less growth, lower productivity, just bad, bad outcomes.”

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