Odaily reported that Goldman Sachs Group Vice Chairman and former Dallas Federal Reserve President Kaplan said the Federal Reserve may need to raise interest rates as early as September if inflation remains persistently high. His comments centered on whether inflation data cools between now and September.
Kaplan points to September or the fall as a safer timing
Kaplan said: “If inflation data does not cool between now and September, it would be wise for the Fed to act in September or in the fall. That would be the safer approach.” His remarks tied the possible timing of a rate increase directly to incoming inflation data and framed further tightening as a response to inflation that remains elevated.
After Fed Chair Wosh said the central bank remained focused on fighting inflation, markets shifted toward a more hawkish stance. Traders sold short-term Treasuries, pushing up some yields. Wosh’s comments were reinforced by the Fed members’ individual projections, in which half of the members expected a rate increase before the end of the year.
Kaplan says Fed moves are rarely one-off actions
Kaplan also said that if inflation remains stubborn, it would indicate that monetary policy is still too loose. He noted that the Fed’s policy actions are rarely single moves, and that rate increases often come in a series of two or three steps. In his view, if the Fed acts in September, it needs to be prepared for what follows.
He added: “There may be one or two more.” Kaplan’s comments therefore described not only a possible September decision, but also a broader sequence of policy actions if inflation does not cool. The remarks were cited from Jinshi and published by Odaily.