Comments from Kaplan

  • When the Fed makes a commitment, it needs to fulfill it. So he now stands by the Fed pledge on rates, despite dissenting
  • Says he is not sure the economy will need increasing accommodation three years from now
  • He worries that new, low-rate promise will create imbalances, instabilities and promote risk taking

He is absolutely right to worry about excessive risk taking. Imagine going back in time to 2019 and cutting rates by 150 bps without a pandemic taking place. Where would stocks be in that scenario? That's what the Fed is pledging for 2023.