NEW YORK—At least one Fed president is urging caution before overreacting to data indicating the economy is slowing.
Dallas Fed President Robert Kaplan said first quarter data “are going to be a little bit noisy,” and added there are “lots of odd things going on,” some of which is related to the now-resolved partial government shutdown, and that argues against a pessimistic interpretation for now, according to the Wall Street Journal.
Kaplan said no one reviewing newly released numbers showing weak consumer spending and more inflation weakness in February should “draw too much conclusion,” and added “it wouldn’t surprise me” to see those numbers improve once the economy moves further along into 2019.
Kaplan, who is not a voting member of the rate-setting Federal Open Market Committee, said global growth, mixed U.S. data and weak inflation are all driving the Fed’s caution when it comes to rates. He told the Wall Street Journal he doesn’t expect any rate increases this year, and declined to comment on whether or not a rate cut is needed. He conceded the bond market has been showing “skepticism” about future growth, the Journal said.
Kaplan said he believes it’s time for the Fed to be “flexible and patient,” saying the Fed is operating in “the neighborhood of neutral.”