Dr. Olajide Oladipo (left), Professor of Business and Economics sits down with William Dudley the President and CEO of the New York Federal Reserve Bank (right) among faculty members, students, and community members all in attendance on Friday morning for their roundtable discussion.
There are 12 Federal Reserve Banks around the United States, one of them being in downtown Manhattan near Wall Street and it is a part of the second district which also includes Northern New Jersey, (Fairfield County) Connecticut, Puerto Rico, and the Virgin Islands. “It is part of our mission that we want to represent the communities in our district, so four times a year I get out and visit businesses, people from educational institutions, manufacturing facilities, and community development organizations to explain what we do and more importantly to find out what’s going on within the community and what we need to do at the Federal Reserve to set monetary policy,” William Dudley says, divulging the various matters that effect the success of business relations such as limited subway access to residents in Queens and the affordability of housing.
Despite these setbacks however Dudley assures that Queens is doing quite well and the employment growth has improved overall across the state. “Right now, the Economy is at a pretty good place,” Dudley says. He explains that this improvement in the economy is due to developments in the residential, manufacturing, technological, transportation, and tourist industries. Although he noted that the new trade and immigration agendas can potentially have a negative effect on the latter of that list.
“The Federal Reserve has two missions which is maximum sustainable employment, and price stability and so we’re trying to find that balance,” Dudley says. Throughout the discussion, he stresses the importance of these two objectives in maintaining a stable Economy.
“Is it perfect? No but we want to be careful not to throw the baby out with the bath water. What we want is a system where we have banks with adequate capital so that the probability of a large bank failing is ( significantly low) and if a large bank does fail it does not threaten to take down the rest of the financial system,” says Dudley about the 2010 Dodd-Frank Act in response to Dr. Oladipo’s inquiry of whether its’ removal would be beneficial. He argues that it is not a question of removing the Act that put restraints on larger industries resulting from the 2008 financial crisis but simply improving Financial Reform Legislation.
In response to Dr. Oladipo’s question of whether he believes the upward movement in interest rates is politically driven Dudley says laughing “If I said that the decision was politically driven that would be an unbelievable news story. The Reserve remains apolitical in decision making”. He adds, “The Monetary Policy has to be a little less accommodative or it will create inflation therefore a 2% interest rate is necessary to maintain this goal. It is a delicate adjustment but I think the Economy will be able to adjust to this just fine.”