Fed Kaplan Says Markets Have Clear View of Fed Policy by Bloomberg

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© Bloomberg. Robert Kaplan, President and CEO of the Federal Reserve Bank of Dallas, speaks during an interview with Bloomberg Television at the Jackson Hole Economic Symposium sponsored by the Federal Reserve Bank of Kansas City in Moran, Wyoming, United States, Friday August. 23, 2019.

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(Bloomberg) – Federal Reserve Bank of Dallas Chairman Robert Kaplan said the central bank has made it clear to investors and businesses where the benchmark policy rate will be over the next several years.

“The markets and the public have pretty good clarity,” Kaplan said in an interview with CNBC. “The markets predict that the fed funds rate will likely stay at zero until 2023.”

U.S. central bankers left their policy rate unchanged in a zero to 0.25 percent range earlier this month, and said they expected that range to be appropriate until the markets labor have reached their maximum employment estimate and until “inflation hits 2% and is on track to moderately exceed 2% for a while.” “

Kaplan said it was constructive to debate how quickly the Fed is raising the benchmark lending rate because those goals are within reach.

Dissent, flexibility

Kaplan dissented against the wording of the statement. The Dallas Fed chairman said in a Sept. 29 essay that it would take at least 2022 or 2023 for the economy to get closer to targets.

“Beyond that point, I think the committee should retain more flexibility in policy rates to decide the appropriate stance of monetary policy,” he said in the essay.

Kaplan told CNBC that the US economy needs “more fiscal stimulus” and that will create downside risks if it is not forthcoming. U.S. stocks climbed on Wednesday as lawmakers and the White House appeared closer to closing a deal on increased support for the economy.

The Fed’s preferred inflation index rose only 1% for the year ending July, while the unemployment rate was 8.4% last month.

Kaplan started at the Dallas Fed in 2015. Previously he was a professor at Harvard Business School and before that was a Goldman Sachs Group Inc (NYSE :). partner.

© 2020 Bloomberg L.P.

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