U.S. labor market not yet healthy -Fed's Dudley

Reuters

Sept 27 (Reuters) - An influential Federal Reservepolicymaker on Friday unscored his commitment to accommodativepolicies, saying the labor market is not yet healthy andinflation should firm in the months ahead.

New York Fed President William Dudley's speech was verysimilar to one he gave Monday in which he strongly defended theU.S. central bank's bond-buying program and said the economicrecovery still needs support.

On Friday, he pointed to conflicting information on the U.S.labor market, which was badly bruised by the Great Recession buthas improved in recent years, with unemployment now down to 7.3percent from a 10-percent peak in 2009.

"Job loss rates have fallen, but hiring rates remaindepressed at low levels. Taken together, the labor market stillcannot be regarded as healthy," Dudley, a permanent voter on Fedpolicy and a close ally of Chairman Ben Bernanke, said accordingto prepared remarks at Syracuse University.

"Numerous indicators, including the behavior of laborcompensation, are all consistent with the view that thereremains a great deal of slack in labor markets," he said.

As for currently soft inflation, Dudley said he expects itto "firm further in the months ahead" and move toward the Fed's2-percent goal. Still, he said, the Fed "recognizes thatinflation persistently below 2 percent could pose risks toeconomic performance."

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