Fed's Kaplan wants to take more of a wait-and-see approach to policy
Fed's Kaplan wants to take more of a wait-and-see approach to policy before making a judgement, in his essay. He believes the FOMC is near neutral right now, and believes such a posture would be particularly wise given his base case is for "solid GDP growth" this year, with the labor market at levels he would consider "at or past full employment," while financial conditions are "particularly robust by historical standards." He repeated, monetary accommodation is not “free,” and he is "concerned that adding monetary stimulus, at this juncture, would contribute to a build-up of excesses and imbalances in the economy which may ultimately prove to be difficult and painful to manage." He is continuing to monitor the yield curve but cautioned "it is important to emphasize that financial markets can change very rapidly and are highly sensitive not only to increased economic uncertainties, but also to expectations of Federal Reserve monetary policy actions." Note that Kaplan is a centrist-hawk and will be a voter in 2020.