From NY Fed President Dudley:
A top Federal Reserve official warned Friday that the current low borrowing rates enjoyed by the U.S. government will not last forever, and said elected leaders need to start getting deficits under control to prepare for that environment.
“We are in an unusual period” where events, most notably the current course of Federal Reserve policy, have created a time of very low government borrowing costs, Federal Reserve Bank of New York President William Dudley said.
In remarks prepared for a conference held by the University of Chicago Booth School of Business, the central banker said what exists now “will not last, and the fiscal authorities need to factor this in when considering what needs to be done to put the federal budget deficit and the nation’s debt burden on a sustainable path.”
“These challenges may be more daunting than fully appreciated currently,” he said.
As he has in the past, Dudley cautioned against cutting deficits too aggressively, and told legislators they should be mindful not to increase headwinds too much right now, while the economy is still struggling to find its footing. “Fiscal consolidation should take into consideration the offsetting adjustments needed to keep the economy on an even keel,” the central banker counseled.
He forgot to mention that MP has the most important role to play in providing the “offsetting adjustments”!