Former NY Fed Chief Warns Fed’s Credibility as an Inflation Fighter Is at Risk

ME News reports that on May 26 (UTC+8), former New York Fed President Dudley warned that the Fed’s credibility as an “inflation fighter” is at risk due to its prolonged failure to achieve its 2% inflation target. “We’ve been above the Fed’s inflation target for more than five consecutive years,” Dudley said. “And there is a risk that inflation expectations could eventually become unanchored.” His remarks highlight the challenges facing new Fed Chair Walsh, who assumes leadership as the Consumer Price Index (CPI) records its largest monthly increase since 2023, following sustained and fierce criticism from Trump over Powell’s refusal to ease monetary policy. Dudley believes that Walsh’s appointment, combined with Trump’s pressure for rate cuts, further intensifies the Fed’s credibility challenge. (Source: BlockBeats)