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4/12/2017, 7:08 PM (Source: TeleTrader)
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Kaplan backs three hikes alongside QA reduction

In remarks made on Wednesday after a speech in Fort Worth, Texas, the head of the Federal Reserve Bank of Dallas reiterated his base case for this year's increase in the benchmark interest rate in the United States is for three moves of one quarter of a percentage points each, and added the central bank's plan to start reducing quantitative easing (QA) doesn't change his view. Robert Kaplan, a voting member of the Federal Open Market Committee, expressed belief that the speed at which the $4.5 trillion balance sheet would be unwound isn't a pressing issue.

The central banker said inflation is advancing toward the 2% target and that the rate-setting panel "can afford" to gradually tighten monetary policy. He warned growth in the gross domestic product would probably become slower due to structural factors including the aging workforce, as evident from the decrease in the yield on ten-year government debt. However, the current unemployment rate of 4.5% may still decline due to some remaining slack, Kaplan underscored. The Dallas Fed president stated economic expansion probably can't be bolstered by rising debt anymore.

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