Fed’s Kaplan on panel discussion hosted by UBS: Not out of the pandemic woods

Sees unemployment declining while GDP increases

Fed’s Kaplan is participating on a panel discussion hosted by UPS and weighs in on the Covid risks by saying the US is not out of the pandemic woods just yet. He is concerned about the variants that can be less susceptible to a vaccine. 

He is supportive of the Fed being aggressive while the US remains of the teeth of the pandemic. Once it becomes evident the risks of the pandemic are behind us, he favors withdrawing the extraordinary monetary policy measures. 

Kaplan expects unemployment to move down toward 4% by the end of the year and sees GDP growth near 6.5% in 2021. Both are near consensus from the Fed (Fed sees 6.5% growth and 4.5% unemployment rate).  

With incomes remaining solid and the fiscal policy measures from the government, the consumer spending has remained strong, but sees skills training as being important to get people back into the workforce.  

On inflation, he feels it is likely that inflation pressures will be resolved.  

He would prefer to substantially taper asset purchases before adjusting rates.  

Kaplan is the president of the Dallas Fed which tends to be one of the stronger Fed regions.  He is not a voting member on the Federal Reserve Board in 2021 (nor in 2022 as well).
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