Kaplan is a pretty good barometer
Based on the comments from Dallas Fed President Kaplan today, the Fed stance may be more dovish than Janet Yellen indicated.
"The Fed must be very patient and cautious in raising rates further," he said. "I'm going to need to see that improvement in inflation."
He spoke at the end of May and noted soft inflation then but said it wasn't enough to alter his forecast, which is for three hikes this year. He didn't reiterate that forecast today but he wasn't specifically asked.
The tone from Kaplan is closer to what the market expected from Yellen this week. The widespread belief was that she would signal that the Fed wouldn't move until it had more confidence on inflation or saw definite progress. Instead, she brushed aside weak prices as a confluence of one-off factors that will fade.
Kaplan's comments are an early sign that the Fed may be less inclined to hike again than Yellen indicated. That's a negative sign for the US dollar that hasn't been picked up by the market but it will be if other Fed speakers hit the same note.
The schedule for the week ahead:
Monday: Dudley (1200 GMT), Evans (2300 GMT)
Tuesday: Fischer, Rosengren, Kaplan
Thursday: Powell
Friday: Bullard, Mester, Powell
