US borrowing costs likely to stay low

Federal Reserve Bank of New York president William C Dudley says the pace of interest-rate increases is likely to be shallow once the Fed starts to tighten, and recent weakness in the economy was largely the result of temporary conditions.

“It will be important to monitor developments to determine whether the softness in the March labour market report evident on Friday foreshadows a more substantial slowing in the labour market than I currently anticipate,” he said in a speech yesterday.

Dudley reinforced chairwoman’s Janet Yellen’s message that borrowing costs are likely to remain low after the Fed raises its benchmark rate above zero. His comments were the first from the inner core of the Fed’s leadership since a government report last Friday showed payrolls expanded less than forecast in March.