Feds Kaplan: Tapering soon allows for the Fed more flexibility on tightening

Author: Greg Michalowski | Category: Central Banks

Dallas Fed president Kaplan on the news wires

Dallas Fed president Kaplan on the news wires
  • Reiterates tapering should start soon and be gradual
  • Taper could take 8 months
  • Tapering soon allows for Fed more flexibility on tightening
  • he questions the efficacy of the Fed's asset purchase program
  • Feels that asset purchases will not speed the labor market matching process
  • Faster taper does not mean that the Fed will raise rates faster
  • It is critical to divorce decision on taper from decision on rates
  • Envisions a treasury taper of US$10 billion per month/US$5 billion in MBS
  • Delta variant could slow job gains but it will not slow the recovery unless vaccines prove less effective in preventing hospitalizations and deaths
  • He will reassess next month his own view from June that a H2022 interest rate hike would be appropriate

Kaplan is not a voting member until 2023. He is more of a hawk. Although he is not a voter, he still has a voice at FOMC meetings.

Since the FOMC decision last week, the following Fed officials have spoken.  I would characterize Clarida's comments today to be moderately hawkish in that he sees taper by December (given his economic forecast).  

As for the others, I would bucket the hawks to be:
  • Kaplan
  • Waller
  • Bullard
The doves to be:
  • Powell
  • Brainard
  • Kashkari
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