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Fed's Dudley: We want to make monetary policy 'less accommodative'

William Dudley
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William Dudley

The president of the New York Federal Reserve thinks the economy is in a "pretty good place" right now, and moving forward monetary policy should be "a little bit less accommodative," as the U.S. inches closer to full employment.

New York Fed President William Dudley made these comments during an event held at York College on Friday morning. Rising interest rates will be a "delicate adjustment ... not something that's very harsh," he went on, saying it's both appropriate and necessary today.

"If monetary policy were too accommodative, we would actually get an inflation problem over time," Dudley emphasized.

In fact, the U.S. is "pretty close" to meeting both the Fed's employment and inflation objectives. Dudley explained in the fireside chat Friday that he expects fixed income investing will become "less attractive" going forward, as interest rates rise.

Earlier this month, the New York Fed announced it's reduced its estimates on the U.S. economy's growth rates in the first and second quarter, following the latest data on domestic retail sales, housing, construction and manufacturing.

At its March meeting, though, the U.S. Federal Reserve hiked rates for the second time in three months, amid rising confidence that the economy is poised for more robust growth.

The Fed has indicated that it still expects three rate increases in 2017. In a statement, the central bank noted that business investment has "firmed somewhat," a slight upgrade from the characterization of "soft" after the Jan. 31 to Feb. 1 meeting.

— CNBC's Jeff Cox contributed to this report.