May 25, 2018 / 5:37 PM / 3 months ago

'Agonizing' debate ahead for Fed as rates near neutral level -Kaplan

DALLAS, May 25 (Reuters) - Federal Reserve policymakers are nearly unanimous in their view that interest rates should continue to rise gradually, but the U.S. central bank faces an “agonizing” debate once rates reach a level where they are neither boosting nor braking the economy, Dallas Fed President Robert Kaplan said on Friday.

“I’m not yet there on what we should do once we get to neutral,” Kaplan told a conference in Dallas. “I think we are going to have quite an agonizing debate for lots of reasons, including the shape of the yield curve.”

Kaplan and other policymakers have raised the possibility that the relatively flat yield curve could invert if the Fed raises rates too far or fast, in what could be a prelude to a recession. (Reporting by Ann Saphir Editing by Paul Simao)

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