In a speech on Monday, New York Fed president Bill Dudley said:
As the FOMC has consistently communicated, the timing of lift-off will depend on how the economic outlook evolves. As I have discussed, the labor market has improved substantially and I expect to see inflation begin to firm later this year. If this labor market improvement continues and the FOMC is reasonably confident that inflation will move back to our 2 percent objective over the medium-term, then it would be appropriate to begin to normalize interest rates.
Dudley added that where interest rates go after the Fed begins raising rates is just as important as when the first rate hike comes, and Dudley reiterated that the Fed will respond to financial and economic conditions once it begins tightening.
In short, the Fed will not raise interest rates and follow a steady path upward.
Dudley added that the Fed's terminal fed funds rate, or the level at which it stops raising interest rates, will likely be around 3.5%, lower than the historical average of 4%.
Overall, Dudley's comments are not all that different than what we've heard from Fed chair Janet Yellen recently and the Fed's latest policy statement, but as the president of the New York Fed, Dudley's words are closely followed by Fed watchers and the market.