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U.S. Markets

Fed's Kaplan's sees U.S. rate hike in 'not too distant future'

WASHINGTON (Reuters) - Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday that the U.S. economy is strong enough to justify an interest-rate hike in the “not too distant future,” but increases will be very gradual.

Inflation is “inching toward” the Fed’s 2-percent target, and while there is still slack in the U.S. labor market, 2-percent GDP growth this year will likely push unemployment below its current 5-percent level.

“We want to normalize rates,” Kaplan said. But given the headwinds globally, “There’s a limit to how fast we can do it.”

Reporting by Ann Saphir; Editing by Nick Zieminski

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