Comments from Kaplan ahead of today’s Federal Open Market Committee (FOMC) meeting. Kapaln argues that fiscal policy is what is preventing inflation from falling and the Federal Reserve for cutting rates:
- one
of the reasons why
the Fed is
struggling to be
able to cut
rates and why
service sector
inflation and wages
are so
sticky, is excessive
government spending - the
inflation rate on
goods is today very,
very low … the supply chain
issues have
gotten worked out -
the inflation issue
today is
almost exclusively
in the not
totally but almost
exclusively
in the service
sector … we’ve got a very
sticky labor
force cost issue (ps. US employment cost Index for Q1 comes in at 1.2% versus 1.0% expected)
Kaplan’s recommendation not to the Fed, but government:
- slow down
implementation of
the inflation
reduction act and
infrastructure
act projects, not
cancel but
slow, and let’s
wrestle this
inflation issue to
the ground
Kaplan spoke with CNBC, interview is here:
***
The Federal Open Market Committee (FOMC)’s policy decision will be released on Wednesday May 1 at 2 pm US EDT (1800 GMT) with Fed Chair Jerome Powell following up with his press conference at 2:30 pm (1830 GMT).
Earlier previews:
- FOMC meet this week: “the most interesting news about this meeting will come on 22 May”
- “Fed has simply run into a brick wall”
- expect a hawkish Fed and Powell
- Fed cuts are not imminent
This article was written by Eamonn Sheridan at www.forexlive.com. Source