Dallas Fed President Robert Kaplan said yesterday that it could take a few months to see how much the US economy is slowing. And he added that “I don’t think we should be taking any action on the fed funds rate”. His comments are in line with the expectations that Fed should at least stand pat through the first half of the year.
Meanwhile, Kaplan also echoed other Fed official’s comments that there will be decision regarding the balance sheet runoff in the “not-too-distant future”. Though, he declined to comment whether the decision will be made by March FOMC meeting.
He also indicated that the balance is a “critical tool” that Fed need to have as “one of the several tools in the event of a down turn”. And the balance needs to have the capacity to respond to the next downturn.
