Fed's Kaplan: Delta variant limiting production output

Feds Kaplan speaks on Fox Business

Fed's Kaplan on Fox Business

• The big "imponderable" is path of Delta virus.
• So far the Delta virus has not had a material effect on mobility
  
• Delta virus is limiting production output and slowing return to office
  
• will be watching it Delta carefully
  
• if Delta is having a more negative effect on GDP growth could cause me to adjust my views
  
• a big economic variable is how quickly to get people vaccinated; right now in a negative trend as far as spread of Delta virus
  

The comments are modestly more dovish. NASDAQ futures have turned positive (implying gain of 15 points). S&P and Dow are still negative with the Dow implying a -72 point decline

On August 11, Kaplan in an interview on CNBC said:

• If the economy unfolds as expected, in favor of announcing a plan a plan to taper at the September meeting and start tapering in October
  
• CPI today was consistent with our outlook
  
• There is not a demand problem in the US. The problem is supply
• still expects broadening of inflation pressures into next year
  
• Think the bond market is looking through these high inflation trends and expects the Fed to anchor inflation at 2%
  
• Does not want Fed to run at this speed for too long and for Fed to have to take more aggressive action later on
  
• There is in enormous amount of liquidity in the world and there is a tremendous bid in the 10 year sector
  
• I am divorcing my decision making on adjusting purchases with the Fed funds rate. There is different set of criteria when looking at raising interest rates
• My forecast is for a hike in 2022 but will make that decision as the economy progresses in 2022
  
• Delta variant may prolong supply chain disruptions

August 21, 2021 at 12:48AM

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