Economist's Insights

Scheduled FedSpeak is Silent on Policy, Kaplan Calls for More Tightening in Monday Essay

May 22, 2017

Monday’s Fedspeak that occurred while markets were open proved to be uneventful. Neither Harker nor Kashkari discussed monetary policy or the economy in their scheduled remarks.

Dallas Fed President Kaplan published an essay on current economic conditions and monetary policy. Within the work, he continued to call for two more rate hikes in 2017 (three total) and the commencement of balance sheet normalization within the current calendar year. Kaplan believes the softness in recent inflation readings aren’t indicative of a trend change but said he will look to incoming data for confirmation. He also believes the U.S. economy is “very close” to maximum employment. On collateral consequences, waiting too long to tighten further could cause “significant imbalances”, Kaplan said, that “are often easier to recognize in hindsight and can be very painful to address.”

Markets will be listening for policy takes from Brainard and Evans later this evening.