Fed’s Kaplan not advocating for rate hikes at this point, wants to ‘show more paitience’
A top Federal Reserve policymaker said on Thursday he is not advocating for interest rate hikes at this point and instead wants to “show more patience” waiting for the U.S. economy to show clearer signs of improvement.
Dallas Fed President Robert Kaplan, speaking as results trickled in from Britain’s referendum on membership in the European Union, said he was concerned about the vote because the result could stress international trade, which could hurt global economic growth.
Asked after a speech why he appeared to back away from earlier conditional promises to advocate for a U.S. policy tightening soon, Kaplan said: “In light of what’s happened in the last few months … I’m in a position where I want to show more patience and see more information.”
“At this point,” he told reporters, “I’m certainly not in a position to be advocating for further action here. I’m basically in a position where I want to look at more information… The key here is patience.”
A weak May U.S. jobs report and the risk of financial and economic spillovers from Britain’s so-called “Brexit” vote prompted the U.S. central bank to stand pat on rates at a meeting earlier this month. It has left policy unchanged since an initial rate hike in December.
Asked about the vote, Kaplan said: “More integration between countries globally … tends to on balance improve global growth… So the reason I’m focused particularly on Brexit is … first there’s the financial impact, (then) there’s the economic impact which would take years to unfold.”
“I’m hopeful that there will be actions taken by governments that will improve growth prospects, not diminish them,” he added.
Kaplan, who does not vote on policy this year, said he will be watching U.S. data for “a trend established that we’re making improvement” before moving on rates. “It would be helpful to remove accommodation (gradually), but we can’t force it.”