Dallas Federal Reserve President Robert Kaplan on Monday stated that the economy is likely to require almost zero interest rates for the next two and a half years or three years. However, he warned that the US central bank should not limit the institution to low borrowing costs after that period.
He predicts that by 2023, U.S. unemployment. is expected to decline to 4% or 3.5%, from 8.4%. However, he did not comment on the zero interest rate at this time. He further argued that the assessment should be better submitted to the FOMC committee.
Kaplan's comment was the first comment since he voted in disagreement last week on the Fed's decision to promise low-interest rates until inflation reaches the central bank's target of 2%.
Tamabah Kaplan, the announcement of The Fed's promise has had an impact on the financial markets especially on the stock market where stock prices have fallen since the announcement. He argues that the market has not really digested the promise of low-interest rates by The fed.
Finally, Kaplan thinks that the economy will slow down at an annual rate of 30% this quarter and will continue to grow strongly this year and beyond with the assumption that the measures implemented will be able to curb the spread of the Covid-19 epidemic.
