Dallas Fed president Kaplan: GDP will grow 6.5% this year

Author: Greg Michalowski | Category: Central Banks

Dallas Fed president Kaplan speaking on moderated panel hosted by Bard College

The Dallas Fed president Kaplan is speaking on a moderated panel hosted by Bard College. Kaplan has been more of a hawk of late, calling on the Fed to start looking at possible tapering of QE purchases. 

Kaplan is a voter in 2023. 

His initial comments are focused on the economy.  Will monitor as the panel discussion continues:
  • GDP will grow 6.5% this year with risk to the upside
  • unemployment could fall below 4% this year
  • some of factors pushing up on inflation near term will get resolved within 12 months
  • expects PC inflation to end the year at 2.25%, but watching closely 
  • would like to begin discussions about tapering sooner rather than later
  • since December, when the Fed said substantial further progress or for taper, have seen more vaccine rollout, and more fiscal aid
  • it is clear that the Fed will meet bar for tapering sooner than he thought in January
  • does not want to be preemptive but does not want to be late either
  • Fed bond buying can create excesses and imbalances
  • will be much healthier as an economy one we can start weaning from QE
  • expects to meet standards for Fed rate lift off sometime in 2022
  • will not prejudge whether taper should be complete before Fed raises rates
  • says that reasons why Fed inflation may not be transitory include strong demand, labor shortages
  • there is a little more tightness in the labor market
  • new Fed framework includes commitment to keep inflation anchored
  • excesses and imbalances in financial markets can threaten sustained achievement of feds two goals
Although Kaplan has been bearish, his comments today are a touch more descriptive as to his reasons for starting to taper. The NASDAQ index moved to a new low of 13439.39. It is trading below its 50 day moving average at 13513.34 currently. The 100 day moving average comes in at 13391.37. The NASDAQ index remains the most vulnerable. The Dow industrial average remains marginally higher.

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