Dudley Says Fed Rate Hike Falls Short in Inflation Fight

Former Federal Reserve Bank of New York president Bill Dudley is calling out the central bank's latest decision as too soft on inflation. Speaking to Bloomberg, Dudley said a 25-basis-point rate hike is insufficient and argued that the Federal Open Market Committee should have been more aggressive in its fight against persistent inflation.

The FOMC's two-day meeting concluded with a widely expected quarter-point increase, pushing the federal funds rate target to 3.75%-4.00%. Dudley believes another rate hike is necessary unless the data changes significantly.

He bases his argument on August's core CPI, which saw a 0.3% month-over-month increase. This suggests inflation isn't retreating as quickly as the Fed's 2% target would require.

Dudley also emphasized that the Fed should follow the data, not market expectations, in making its decisions.