Robert Kaplan, president of the U.S. Federal Reserve Bank of Dallas, signaled on Monday that he will back another rate hike at the central bank's policy meeting next month.
"I believe it will likely be appropriate, in the near future, to take the next step in the process of removing monetary accommodation," Kaplan said in an essay published on the regional bank's website.
Kaplan, who is a voting member of the Fed's policy-making committee this year, said he was "increasingly cognizant" of the risks posed by potential economic and financial imbalances.
"Even though we are not meeting our inflation objective, the size of the expected full employment overshoot is growing and should be taken into account in assessing appropriate monetary policy actions," he said.
U.S. jobless rate dropped to 4.1 percent in October, hitting a new 17-year low, while the personal consumption expenditures price index, an inflation gauge preferred by the Fed, rose only 1.6 percent in September, far short of the Fed's 2 percent target.
"I am also mindful that if we wait too long to see actual evidence of inflation, we may get behind the curve and have to subsequently raise rates more rapidly," Kaplan said, warning that this type of rapid rate rise has the potential to increase the risk of recession.
"I think it is important that, to the extent possible, monetary policy accommodation be removed in a gradual and patient manner," he argued.
Many Fed officials also signaled that another rate hike "was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged", according to the minutes of the Fed's latest monetary policy meeting released last week. The Fed will hold its next policy meeting on Dec. 12-13.
"I believe it will likely be appropriate, in the near future, to take the next step in the process of removing monetary accommodation," Kaplan said in an essay published on the regional bank's website.
Kaplan, who is a voting member of the Fed's policy-making committee this year, said he was "increasingly cognizant" of the risks posed by potential economic and financial imbalances.
"Even though we are not meeting our inflation objective, the size of the expected full employment overshoot is growing and should be taken into account in assessing appropriate monetary policy actions," he said.
U.S. jobless rate dropped to 4.1 percent in October, hitting a new 17-year low, while the personal consumption expenditures price index, an inflation gauge preferred by the Fed, rose only 1.6 percent in September, far short of the Fed's 2 percent target.
"I am also mindful that if we wait too long to see actual evidence of inflation, we may get behind the curve and have to subsequently raise rates more rapidly," Kaplan said, warning that this type of rapid rate rise has the potential to increase the risk of recession.
"I think it is important that, to the extent possible, monetary policy accommodation be removed in a gradual and patient manner," he argued.
Many Fed officials also signaled that another rate hike "was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged", according to the minutes of the Fed's latest monetary policy meeting released last week. The Fed will hold its next policy meeting on Dec. 12-13.
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