Fed’s Kaplan says he’s open-minded about further rate cuts

Bloomberg News/Landov Dallas Fed President Robert Kaplan is not a voting member of the FOMC this year.

Dallas Fed President Robert Kaplan said Thursday he won’t commit to a course of action for monetary policy, preferring instead to carefully watch to see if the economy weakens or downside risks alleviate.

“I intend to avoid being rigid or predetermined from here, and plan to remain highly vigilant and keep and open mind as to whether further action on the federal funds rate is appropriate,” Kaplan said in an essay posted on his regional Fed bank’s website.

Kaplan said he shared the concern expressed by other Fed officials, revealed in the minutes to the Fed’s September policy meeting, that weakness in business spending could spread and ultimately impact consumer confidence and spending.

On the other hand, he said downside risks might alleviate some if trade tensions moderate somewhat. And he said he was “mindful” of the argument of Fed hawks that rate cuts might create asset bubbles as investors seek higher yields.

Kaplan said he agreed with Fed critics that the stance of Fed policy was too tight prior to the central bank reversing course with two rate cuts in July and September.

Read: Fed grew more worried about economy at September meeting, minutes show

Stock-index futures drifted lower on conflicting reports of the status of U.S.-China trade talks.

On the turmoil seen in the money-markets last month, Kaplan said he supports “more permanent steps” to ensure the funding market functions, an apparent reference to a standing repo facility that many have called for.

The Dow Jones Industrial Average DJIA, +0.70%  was up 181 points on Wednesday.

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