It's Time to Pause Rate Hikes, Fed's Kaplan Says

The time is right for the Federal Reserve to pause and adopt a "wait and watch" stance to assess the impact of the monetary policy normalization it has enacted since late 2015, Dallas Federal Reserve Bank President Robert Kaplan said in a Bloomberg interview. 

Kaplan — a non-voting member of the Federal Open Market Committee, the policy-setting arm of the Federal Reserve — called for holding rates for the first couple of quarters until issues surrounding uncertain global growth, weakening in interest rate-sensitive industries and tighter financial conditions are resolved.

"I think those three issues — I'm sure — are affecting the markets, but they're also affecting my thinking about monetary policy. It's going to take some time so see the depth and breadth of those three issues," Kaplan said. 

The central bank should be open to considering making adjustments to its balance sheet plan if needed, he said. 

The central bank hiked the benchmark rate by 25 basis points in December to 2.25 percent.

The prevailing interest rate is modestly accommodating of growth, Kaplan said. 

"What we do in 2019 will turn out to be more significant than whether 2.25 to 2.5 is too far." 

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