Former Federal Reserve President

Turmoil on Wall Street is a feature, not a bug, of the Federal Reserve’s fight against inflation, according to former New York Federal Reserve President Bill Dudley.

“What’s happening right now is exactly what the Federal Reserve wants to happen,” Dudley told CNN in an interview, referring to recent volatility in the financial markets.

Turbulence on Wall Street has increased as investors worry about a potential recession and brace for a series of interest rate hikes from the Federal Reserve. The S&P 500 lost more than 13% of its value between January and April, marking its worst start to a year since 1939.

“They want a weaker stock market. They want higher bond yields,” Dudley said. “The stock market I think is finally catching onto that.”…

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Turmoil probably limits “irrational exuberance” which slows the economy as people decide to wait rather than invest. And that in turn should help moderate inflation.

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