In an interview with CNBC on Tuesday, Dallas Federal Reserve Chairman Robert Kaplan said his baseline scenario points to a temporary rise in prices this year followed by a pullback in 2022, as reported by Reuters. He expects the central bank to start raising interest rates next year.
The central bank official predicts annual inflation this year to be 2.25% to 2.5%. Regarding growth, he pointed out that it would be 4.5% and that the unemployment rate will reach 4.5%.
Kaplan explained that he will advocate reducing stimulus after seeing real results, not just solid forecasts. “My forecast for eliminating the accommodation is more aggressive than the median average of Fed officials,” he said.
While Kaplan indicated that he expects the Fed to start raising rates in 2022, indicated that at this time we are still in the middle of the pandemic.
There was no market reaction to Kaplan’s comments. Traders will now keep an eye on what might happen with the presentation of Jerome Powell (Fed Chairman) and Janet Yellen (Secretary of the Treasury) before the House Financial Services Committee. In addition to Tuesday, Bullard (St. Loius Fed), Bostic (Atlanta Fed) and Brainard (FOMC Governor) will speak in public.
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