Fed's Kaplan indicated policy is on hold in 2020
Fed's Kaplan indicated policy is on hold in 2020 unless there is a "material change" in the outlook, reiterating comments from Chair Powell. Interestingly, he said he's already baked into his outlook a weak manufacturing sector, in a Bloomberg TV interview. Note that the Dallas Fed president rotates into voting status next year. He typically leans to the hawkish side. Analysts suspect he could be pleasantly surprised by manufacturing growth. He's been worried that weak capex and manufacturing would seep into other parts of the economy, though "analysts haven't seen that yet," he admitted. He does expect a solid consumer given the tight job market, which he doesn't believe will dissipate. There isn't much slack, he added. He did indicate he'd support a shift in policy strategy, one that targets average inflation. He's tolerate some overshoot of inflation under that scenario, which suggests a rate hike is a long way off.