Dallas Fed Bank President Robert Kaplan said Friday (April 9) that the Federal Reserve should reduce its excessive support for the economy ahead of schedule given the greater risks in financial markets and the potential for runaway inflation.
Kaplan said in an appearance at a webinar on investing, while agreeing that the Fed should not exit too early, but also not too late; Kaplan admitted he was one of four officials who agreed that the Fed should raise interest rates next year, and said he was concerned about the economic data in the coming months, and then decided whether the Fed should scale back its monthly bond purchases of $120 billion.
Kaplan believes that the rampant variant of the CCP (New Crown) virus, which has led to a sharp rise in the number of confirmed cases in the Midwest and Northeast of the U.S., is a factor influencing policy decisions, and he still stands by his forecast of 6.5% U.S. GDP growth, 4% unemployment and inflation slightly above 2% this year.
Federal Reserve Chairman Powell and other officials tend to maintain zero interest rates until 2023, they believe that due to the strong rebound in the U.S. economy and the sudden increase in demand, inflation in the next few months or higher than the 2% Bureau indicators, but the rise in inflation is only a short-term phenomenon, the Federal Reserve waiting for employment and inflation targets are reached before considering the exit.
Interestingly, the Federal Reserve Board Vice Chairman Clarida (Richard Clarida) said in the evening of the 9th, if the U.S. inflation rate rises sharply in the second half of this year, to the end of the year is still not as expected back down, the Federal Reserve Board may then have to launch the corresponding measures.
Clarida stressed that the Federal Reserve has enough tools to deal with high inflation, market speculation that if inflation is expected to get out of control, the Federal Reserve will be forced to raise interest rates early; Clarida reiterated that it will not be in order to affect the long bond yields, and the distortion of the yield curve operation (OT).
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