Fed's Kaplan says low rates may be needed for two-and-a-half to three years

FILE PHOTO: Dallas Federal Reserve Bank President Robert Kaplan speaks during an interview in his office at the bank’s headquarters in Dallas, Texas, U.S. January 9, 2020. REUTERS/ Ann Saphir

(Reuters) – Dallas Federal Reserve President Robert Kaplan said on Monday that the U.S. central bank should keep interest rates at their current near-zero levels until the economy is well on track to full employment and price stability, which could take two-and-a-half or three years.

After that point, “I probably think it’s appropriate to remain accommodative, or maybe even highly accommodative,” Kaplan said in an interview with Bloomberg News. “I’m not sure it’s appropriate to decide right now that at that point we should leave rates at zero; I would rather leave those judgements to future committees.”

The comments were Kaplan’s first public remarks since he cast a dissenting vote last week against the Fed’s decision to promise low rates until inflation reaches and is on track to “moderately exceed” the Fed’s 2% goal.

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