Central Banks


Fed’s Kaplan speaking

  • Zero rates (or near 0% I assume) are likely appropriate until late 2022 or sometime in 2023
  • Fed should keep emergency lending facilities, consider other tools until economy on track
  • Need to do more to help small, mid-sized businesses access capital
  • Fed should be willing to be accomodative after crisis, but have flexibility to raise rates.
  • Prolonged zero rates could cause financial market fragilities, excesses, imbalances
  • Recovery has been faster than expected
  • See unemployment at 7.5% at year end (congruent with Fed central tendencies).   5.7% at the end of 2021
  • Sees core inflation at 1.6% at year end and 1.8% at the end of 2021 (the Fed is projecting 1.2% inflation in the central tendencies for end of 2021).
  • Lack of additional fiscal relief is key downside risk to forecast
  • See oil industry capital spending down 50% in 2020. Production flat in 2021
  • Global excess oil inventories wont be worked off before late 2021

The comments show a little higher inflation expectations but toes the line for the most part regarding rates, the trajectory of employment and risks.   

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