Dudley and Kaplan on a development panel
Dudley:
- Policy challenges include taxes, immigration, trade
- A less-complex system would be a good start
- No reason why the expansion has to die of old age
- A less-complex tax system may boost productivity
- It's a puzzle why pricing power is weak but profit margins high
- US operating in a pretty tight labor market
- Hasn't incorporated tax reform into his forecast
- 'We're a long way from tax reform at this point'
- Stimulus oriented tax bill would be 'ill timed'
- Investors aren't paying enough attention to government debt servicing cost
- Dollar is neutral for US inflation outlook
Kaplan:
- Underpinning of US growth is very solid
- Infrastructure underinvested by about $3 trillion, $1 trillion could come from private sector
- Worries about tax cut that could lead to long-term debt load, which would harm future growth
- Says he's wary of pushing rates up to 10-year yields