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(Adds comments, context)
By Jonathan Spicer
NEW YORK, Dec 5 (Reuters) - New York Fed President William Dudley said on Monday there are benefits of having automatic fiscal rules for the U.S. Congress even though he has long resisted legislation that would impose similar policy rules on the country's central bank.
Dudley, an influential Fed policymaker, was asked to defend that position after a speech in which he waded deep into the debate over what policies the Trump administration should pursue next year.
A permanent voter on Fed policy and a close ally of Chair Janet Yellen, Dudley called for automatic stabilizers in certain situations, such as higher national unemployment compensation when the jobless rate rises.
Addressing the nonprofit Association for a Better New York, Dudley was asked by a member of the audience how he could push for such rules while resisting efforts by some congressional Republicans to tie the Fed's interest rate policy to a benchmark rule.
President-elect Donald Trump, a Republican, could boost efforts to constrain the Fed's policy discretion.
Yet the automatic government spending policies would only come into play when the U.S. economy "really needs it, when you are in an economic downturn," Dudley said, adding that doing so would boost the confidence of investors and the public and make them less prone to overreaction.
Whereas "monetary policy is very different," he said, since experiences like the 2008 economic crisis show that "mechanically" following benchmarks like the so-called Taylor Rule "would be absolutely disastrous for the economy."
The Fed has long resisted the efforts to benchmark its policy to a rule and for it to be "audited" if it strays, arguing that it would open the central bank to short-term political pressure.
Following a Taylor Rule, a favorite of Republican critics in which rates are tied to levels of inflation and growth, would have led to "much too tight monetary policy and as a consequence you would have had a much weaker U.S. economy" in recent years, Dudley said.
He said it was important that the U.S. government have "sufficient fiscal capacity" to support the economy in the next downturn. (Reporting by Jonathan Spicer; Editing by Jeffrey Benkoe and Paul Simao)