The president of the New York Federal Reserve said the devastation caused by Hurricanes Harvey and Irma could boost the U.S. economy in 2018 because of the rebuilding efforts that will have to take place.
“The long-run effect of these disasters, unfortunately, is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms,” William Dudley said in an interview with CNBC.
Yet the storms are unlikely to prevent the Fed from raising interest rates or launching its long-awaited move to shrink the central bank’s massive $4.5 balance sheet, Dudley said.
“I think it’s too soon to judge exactly the timing of when the next rate hike might occur,” he said, “but I think the path is clear that of short-term rates are going to move gradually higher over time.”
Fed watchers expect just one more interest rate increase before the end of the year, most likely in December.
Also read: Fed’s Dudley shows no signs of wavering from support for December interest-rate hike
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