Former Fed Kaplan. September is a possibility, but Fed still expects the Fed to be patient

Goldman vice chairman and former Dallas Fed president Kaplan speaking on CNBC

• That won’t take action at June and July meetings
• But do not be surprised to hear some hawkish splash patient rhetoric
• expect the Fed will work hard to maintain its flexibility
• If at the Fed, I am in a risk management position
• I think the next move not known likely be down not up but the timing is
• I would like to see inflation moderately improve between now and September.
• Fiscal spending is more moderate but still running spending programs.
• Fed does not want to see real acceleration in inflation
• We have a jump in labor’s market because of immigration
• Fed was very late to raise rates – up to 20 months.
• I think that the Fed may be a meeting or so late to cut
• The Fed may not get it perfectly right, but they will get a rate
• I expect the dark play meeting to be one cut, maybe a little more with a hawkish commitment
• I think the Fed would be well served to bear on the side of hawkishness
• The market and the Fed are not too far off.
• See Fed funds rate at the end of the year 4 3/4 – 5%
• Think the 10-year rate would be higher then 3.5% by the end of year. Does not put a level on the 10 year.
• Growth in the US will have to come from productivity unless have more immigration
• It always matter who is in the seats at the Fed
• I think have Powell until the end of 2025

The Fed is in the quiet period. So the next best thing is the former Fed officials.

This article was written by Greg Michalowski at www.forexlive.com.