Fed's Dudley warns conditions are tightening

Financial conditions have tightened since the Fed raised interest rates in December, New York Fed President Bill Dudley said Wednesday, according to a report from news service MNSI.

Dudley also said in an interview with the agency that continued tightening on conditions would weigh on the Fed, MNSI reported.

He also reportedly warned that additional strength of the U.S. dollar could have "significant consequences" for the U.S. economy.

Dudley is president of the Federal Reserve Bank of New York and a voting member on the federal central bank's policymaking committee.

His comments come as the Fed ponders its next move on monetary policy. The Federal Open Market Committee in December raised its interest-rate target a quarter point after seven years of keeping it near zero. It was the first rate hike in more than nine years.

Read MoreWall St jobs surge at highest rate in 10 years

Since then, despite policy that Fed officials insist is accommodative, financial markets have been in revolt. Major stock market averages have fallen considerably, with the S&P 500 down more than 8 percent.

At the January meeting last week, the FOMC declined to raise rates and made some changes to its post-meeting statement that Wall Street considered significant. One move was the removal of the word "balanced" when describing risks to the Fed's outlook.

Click here for the latest on the markets.