The Federal Reserve should move slowly in raising interest rates and any increases in the coming months are likely to be gradual in nature, Robert Kaplan, president of the Federal Reserve Bank of Dallas, said Wednesday.
Speaking publicly in Fort Worth for the first time since taking the helm at the Dallas Fed last year, the former academic and Goldman Sachs executive said there are no signs that the U.S. economy is overheating, which would warrant higher rates.
Still, he said, some accommodation in the Fed’s low-interest rate strategy is “appropriate.” He did not comment on whether the Fed might act at its next meeting in November, just before the election, or in December.
“The Fed needs to act very gradually and very cautiously,” he said, adding that the path of the federal funds rate will be flatter going forward than it has been historically.
Kaplan appeared with Fort Worth Mayor Betsy Price at a Chamber of Commerce luncheon focused on international business.
U.S. economic growth this year has been hampered by slower growth overseas, particularly in China, as well as demographic factors at home including an aging population, Kaplan said.
In Texas, which has been dealing with the fallout from low oil prices, there was virtually no job growth in the first six months of 2016, Kaplan said. But the Dallas Fed expects that to grow by 2 percent in the second half of the year, and 2 percent in 2017.