Dallas Fed President Robert Kaplan trade with Canada and Mexico boosts US employment and competitiveness. And he warned that the US risks losing such competitiveness as the trade spat continues. He emphasized that the real threats come from China. Kaplan noted that “intellectual property rights and technology transfer are very big issues, where China is using the joint ventures to get technology and then compete globally” And, “let’s fight what I think is actually a very big threat, which is the relationship with China.”
Regarding monetary policy, he reiterated the view that neutral rate is between 2.50-2.75%. And Fed is “still accommodative” at the current 1.75-2.00%. Kaplan also felt reluctant to dismiss the yield curve signal on recession as it reflections expectations of future growth. Flattening yield curve can also affect behavior of businessmen.
