“As I sit here today, our estimate at the Dallas Fed for GDP growth this year is now 2 percent,” he said during an exclusive interview with FOX Business’ Maria Bartiromo on Friday. “But the big change has really been in the last eight weeks, and it’s been due to heightened trade tensions and then feeding into that decelerating rates of global growth. The world is very reliant on trade.”
The U.S economy expanded at an annual rate of 3.1 percent in the first quarter of the year, according to the third and final estimate released by the Bureau of Economic Analysis on Thursday.
The Federal Reserve, during its two-day policy meeting last week, left its key interest rate unchanged in a range of 2.25 percent to 2.5 percent, but signaled that it could begin cutting rates if necessary to protect the U.S. economy from trade turmoil and other threats. Kaplan, who is a non-voting member of the Federal Open Market Committee this year, said he is taking a patient stance on monetary policy.
“I think it’s too soon to make a judgment about the stance of monetary policy, and the reason is this uncertainty and this deceleration has happened just in the last four to eight weeks,” he said. We’ve got the G20 coming up. We have a whole month before the next FOMC meeting, the Fed meeting at the end of July, and I think it would be wise to just take a little more time and see whether it makes sense to change the stance.”
In addition, Kaplan would also need to see more proof that the U.S. economy is weakening, he said.
“I don’t want to be cutting rates to do fine tuning,” he said. “I’d rather be adjusting policy if I thought there was some material deterioration, and that’s why I want to take a little more time to see how events unfold.”
FOX Business’ Megan Henney contributed to this article.