Fed’s Kaplan: overshooting employment goal could trigger rate hike

By Ernest Scheyder

HOUSTON (Reuters) – Dallas Federal Reserve Bank President Robert Kaplan on Thursday said he was open-minded about raising rates at the Fed’s next meeting, because the U.S. economy is at or close to full employment, and inflation, though low, is expected to rise.

“For me, prudent risk management means some action to remove accommodation gradually and patiently,” he said, adding that the Fed’s strategy is to take a “balanced” approach on achieving its goals. Unemployment, now at 4.1 percent, is expected to fall further in a “deviation” from the Fed’s full employment goal, he said. Inflation, on the other hand, is expected to rise toward the Fed’s goal, and though structural pressures keeping it down are intensifying, “cyclical forces are building.”

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