William C. Dudley is the amazingly out-of-touch President of the New York Fed. Speaking in Queens today, he said the economy has improved, but a long way from improved employment and price stability.
The audience pressed Dudley about higher food prices, wherein Reuters reports “people forget that even as the price of food is rising, other prices are falling. He mentioned the price of the iPad 2, prompting guffaws from the audience.”
This whole commodity price thing is temporary he said. “While rising commodity prices may be giving some of you a bad headache, they are not likely to lead to a sustained rise in inflation to levels inconsistent with our dual mandate,” Dudley said.
After earning his PhD at the University of California, Dudley worked for the Fed. Then he went to work at Goldman Sachs where he was the firm’s Chief Economist for a decade. The is was back the New York branch of the Fed in 2007 and was made CEO in 2009.
Mr. Dudley has plenty of tools over there in the Fed garage that will keep inflation in check. “We are very, very confident that those tools will be completely effective at keeping inflation in check,” he said late last year defending the Fed’s QE2 policy. “We are completely willing to use those tools, when the time comes, to prevent an inflation problem. Higher inflation is not a way out. It is not a solution.”
“The problem with a price-level target is that it’s difficult to explain what you’re doing in a way that doesn’t create larger anxiety about the long-term inflation target,” he said. “We clearly want people to understand that we are committed to price stability over the long run.”
The Fed is committed and prices are stable. If you don’t believe it because the price of your groceries are going up, then the guys running the Fed would say these price movements are just too difficult for you to understand.