Fed's Kaplan sees three more "likely" interest rate hikes

(Reuters) – The US Federal Reserve is expected to continue to raise interest rates at least twice but probably three more times before determining whether further rate hikes would be needed to limit growth, the Reserve Chairman said on Wednesday. Dallas federal government, Robert Kaplan.

"My basic scenario for 2019 is to gradually and patiently raise the federal funds rate to a range of 2.5 to 2.75% or, more likely, in the range of 2.75 to 3%," he said. said Kaplan in an essay setting out the political views.

Last month, the Fed raised its short-term interest rate target range to 2.25% from 2%, which Kaplan has supported. Three further rate increases would raise rates from 2.75% to 3%; Any rise in monetary policy would move from a "neutral" position to a "restrictive" one, he said, slowing economic growth, driving up unemployment and reducing inflation.

"I intend to avoid prejudging possible actions to be undertaken once we have defined our best estimate of a neutral position," said Kaplan, noting that his estimate of "neutral" is slightly lower than the 39, estimate of 3% of most of his peers. "I intend to make this judgment in the spring or summer of 2019 according to the economic outlook of that time."

The Fed will meet in November, but should postpone any rate increase until December, with most Fed policymakers expecting further rate hikes three times next year.

For Kaplan, the prospect that the fiscal stimulus that spurred US growth this year eased next year is pushing him to hesitate to sign more than two rate hikes in 2019 without more economic data.

Short-term forward rate traders, frightened by the slowdown in growth in China and concerned about the sustainability of growth in the United States, are banking on even fewer rate hikes.