WASHINGTON (Reuters) - Dallas Federal Reserve bank president Robert Kaplan said on Friday he is currently “agnostic” about whether the Fed cuts rates at its upcoming October meeting, arguing it may be wise to see more information before adding a third rate reduction to the two the central bank has already approved this year.
“This could break either way,” Kaplan said. But despite risks tilted toward a worse-than-expected economic outcome, “it may be wise to take a little time to assess and continue to turn over a few more cards.”
Kaplan said he supported the Fed’s moves in July and September, but as of the September meeting did not expect more cuts would be appropriate this year.
Kaplan, who is not a voter on interest rate policy this year, said he expected debate at the upcoming Oct. 29-30 policy meeting to focus on whether a slowing global economy has moved beyond dragging down U.S. manufacturing and investment, and begun to hit the U.S. consumer. Consumption is currently holding up growth, and Kaplan said he expects that to continue.
It is, however, a “fragile” situation that could warrant further Fed action down the road. As of September Kaplan said he expected only one more rate cut by the end of 2020, but would be willing to move that forward if problems accelerate.
“Would it shock me if we see more slowing?” he said in comments to reporters on the sidelines of an economic conference here. “We are in this fragile period where we are going to see how this is breaking.”
Reporting by Howard Schneider; Editing by Alex Richardson and Tom Brown