Dudley: Fed's long-term failure to achieve inflation target damages credibility

Former New York Fed President Dudley warns that the Fed's credibility as an "inflation fighter" is at risk due to its long-term failure to achieve its 2% inflation target. He pointed out that inflation expectations may be off anchor and mentioned that the new Federal Reserve Chairman Walsh is facing challenges. When Walsh took office, CPI recorded its largest monthly increase since 2023, while Trump had previously criticized Powell for not relaxing monetary policy. Dudley believes that Walsh's appointment and Trump's pressure to cut interest rates have intensified the credibility challenge for the Federal Reserve.