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Dudley sees three or four Fed rate hikes in 2018 - CNBC

FILE PHOTO: William C. Dudley, President of the Federal Reserve Bank of New York answers questions delivered by moderator Rob Cox during a Reuters Newsmakers panel titled "Banking Culture: Still Room for Improvement?" in the borough of Manhattan, New York City, U.S., February 7, 2018. REUTERS/Ashlee Espinal/File Photo

NEW YORK (Reuters) - The Federal Reserve will likely gradually raise interest rates three or four times in total this year and could aim to eventually raise the policy rate to about 3 percent, New York Fed President William Dudley said in a television interview on Monday.

"The markets are seeing that three is possible, four is possible, but five or six seems to me is quite unlikely," Dudley, an influential outgoing Fed policymaker, said on CNBC. He added: "Three percent is a reasonable starting point in terms of thinking about what 'neutral' might be over the long run."

The Fed hiked rates last month and forecasts showed policymakers split on whether to tighten two or three more times this year. The forecasts also showed the Fed expects inflation to rise above a 2 percent target next year, after more than five years below it.

"I don't think we know exactly how many more hikes we'll do this year," Dudley added. "As long as inflation is relatively low, we're going to be gradual. Now if inflation were to go above 2 percent by an appreciable margin then I think the gradual path might have to be altered."


(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)