Dallas Fed's Kaplan sees a gradual path
Dallas Fed's Kaplan sees a gradual path toward a neutral Fed funds rate and would like to see the balance sheet reduced below $3 tln, mostly made up of Treasuries. He sees growth at 2.50-2.75 in 2018, slowing to 1.75-2.0% by 2020, while inflation is approaching 2%, "but not running away from us." Kaplan sees the current neutral Fed funds level at 2.5-3.0%. He would like to see NAFTA renegotiations result is stronger global trade for N. America and says analysts're $3 tln under-invested in infrastructure. Kaplan said analysts are all well served by regular review of the Fed's functions and governance. He is slightly hawkish non-voter, but is certainly more dovish than Mester yesterday who saw the neutral funds rate nearer 3%.