Dallas Fed President Kaplan speaking in Boston:

  • Forecasts 2% GDP this year
  • Inflation has picked up in the last three months
  • We are getting to the point where it will make sense to raise rates in June or July
  • US is getting pretty close to full employment
  • Expects labor force participation to fall to 61% in next 10 years due to demographics

I like that he put a number on the participation rate. One of the things that irked me about the Fed calling the fall in participation 'natural and predictable' over the past 5 years is that they didn't predict it. Some Fed papers had predicted higher participation but most were silent on it. Something like demographics and aging should be extremely easy to forecast so it's critical that the Fed starts outlining it rather than Monday-morning quarterbacking.


  • There's a cost to running rates this low
  • Sees 'slow, gradual' hikes
  • 'The war of 2016 is we've got to grow'
  • Need fiscal structural policy changes to boost growth higher, not just monetary policy
  • Brexit may affect June decision
  • Outcome of Brexit vote is too close to call
  • Need to be prepared for a potential currency selloff if UK votes to leave
  • World has 1mbps of excess oil supply
  • China GDP may drop to about 6.3%