WSJ's Take on the DBC's Federal Reserve Talk: "Fed's Kaplan Supports Rate Increases Toward 'Neutral' Level"
The Wall Street Journal was front and center capturing the heart of Robert Kaplan's message!
DALLAS--Federal Reserve Bank of Dallas President Robert Kaplan said Thursday the Fed's dual mandate of price stability and full employment has been met, and reiterated that interest rates should be increased toward a so-called neutral level that neither stimulates nor restricts the economy.
"We should be moving toward neutral, but I think we should be doing it gradually and patiently," Mr. Kaplan said during an event with local business leaders at the Dallas Fed building.
The fed funds rate currently sits in a range of 1.75% to 2%, and Mr. Kaplan said his judgement is that the neutral rate probably revolves somewhere around a range between 2.5% and 2.75%, though he said that is far from set in stone.
But, he added, the neutral rate is a "theoretical concept, it's inherently uncertain." He said the Fed does lots of work to try to estimate "at what Fed Funds rate do we believe we're neither accommodative or restrictive."
Fed policymakers have already lifted interest rates twice this year and are expected to increase rates two more times before 2018 ends.
Mr. Kaplan also reiterated that the Fed thinks gross domestic product growth this year will be about 3%.
"The headline is 2018 is going to be a good year for the United States," he said, adding "the unemployment rate is going to continue to trend lower. It's in the high 3's and we think it's going to trend down over the next year or so, closer to 3.5%."
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