Investing.com – Dallas Fed president Robert Kaplan made the case on Thursday that downside risks suggested that the U.S. central bank would have to be patient before embarking on further tightening of monetary policy.
In a speech delivered in Austin, Texas, Kaplan admitted that the “excessive accommodation” carried a cost, he insisted that “at this juncture the Fed needs to show patience in decisions to remove accommodation”.
His argument focused on “key global secular trends” as well as recent developments in regard to the global economic growth and tightening financial conditions.
Kaplan also argued that the Fed should not have a predetermined mindset regarding the path of policy. "This path should be driven by our ongoing analyses of cyclical as well as secular trends," he explained.
As part of his prepared speech, the Dallas Fed chief also forecast that oil markets were unlikely to balance out until well into next year. "We estimate that the market will not find some degree of daily production/consumption balance until mid-2017 and, at that point, excess inventories will begin to decline," he said.