Fed's Kaplan: Prolonged zero rates could cause financial market fragilities
|The Federal Reserve should be willing to be accommodative after the crisis but should also have the flexibility to raise rates, Dallas Federal Reserve President Robert Kaplan argued on Tuesday, as reported by Reuters.
Additional takeaways
"Zero rates likely appropriate until late 2022 or sometime in 2023."
"Fed should keep emergency lending facilities, consider other tools until the economy is on track to meet goals."
"Need to do more to help small, mid-sized businesses access capital."
"Prolonged zero rates could cause financial market fragilities, excesses, imbalances."
"Recovery has been faster than expected."
"Expecting unemployment at 7.5% at year-end, 5.7% at end of 2021."
"Lack of additional fiscal relief is key downside risk to forecasts."
Market reaction
The US Dollar Index largely ignored these comments and was last seen losing 0.37% on the day at 93.92.
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