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It's & # 39; too early & # 39; to determine interest rate cuts



Robert Kaplan

Hailey Lee CNBC

Dallas Fed Robert Kaplan urged his other central bankers to continue to be patient when economic events unfold before making changes in interest rates.

In an essay delivered Monday, Kaplan said he looks at factors like US-China's trade tensions as well as declining global growth and whether they will lead to "a material deterioration" in domestic activity.

"At this stage, I think it's too early to make a judgment on this question," he wrote. "These increased uncertainties have intensified over the past seven weeks and it is likely that events may occur in the near future, which will significantly reduce these uncertainties."

Thus, as for politics, "I think it would be wise to take extra time and allow events to unfold as we consider it appropriate to make changes to US monetary policy."

Kaplan is a nonvoting member this year in the Federal Open Market Committee, which sets monetary policy for the central bank. However, he is allowed input at meetings and occupies one of the "dots" on the Fed's chart of individual members' expectations of where rates go over the next few years.

His remarks come just days after the committee kept the line on prices, but gave an indication that future cuts are coming if conditions deteriorate. Markets may expect three price reductions before the turn of the year, with the first in late July.

Despite the market's expectations, Kaplan said he is keen to do politics to lose now.

"I am concerned that subsidies for monetary stimulants, at this time, will help build up surpluses and imbalances in the economy that can ultimately prove difficult and painful to deal with," he wrote.

Companies in the Kaplan district report tariff problems, with over half saying the duties that President Donald Trump imposes on steel, aluminum, and many products from China, increase enrollment costs and cause reduction of capital expenditure plans.

But he said the economy otherwise looks strong, while inflation may not be as weak as Fed's preferred metering point suggests only 1

.5%, short of Fed's 2% goal.


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