Fed was not aggressive enough at first: Dudley (by Greg Robb)

WASHINGTON (MarketWatch) - With the benefit of hindsight it is clear that Federal Reserve monetary policy was not as aggressive as it should have been in the wake of the financial crisis, said William Dudley, the president of the New York Fed Bank, on Monday. Even though policy was highly accommodative by historical standards, it was less powerful than normal because housing, one of the primary channels through which lower rates influence the economy, was impaired, Dudley said in a speech to the National Association of Business Economics in New York. The stimulus from lower rates also seemed to wear off as fewer consumers were induced to spend, he said. The low interest income of savers also hurt growth, he said. Dudley said these factors led him to support the more aggressive third round of asset purchases adopted by the Fed last month. In his remarks, Dudley said the outlook for the economy "remains somewhat cloudy." He said that even if the economy showed signs of strengthening, the Fed would not respond in a "hasty manner" until it was confident the recovery was securely established.