Fed's kaplan: prudent not to hike in recent months

Robert Kaplan, president of the Federal Reserve Bank of Dallas Source: Federal Reserve Bank of Dallas The Federal Reserve's policy-making committee was "prudent" in keeping

interest rates unchanged at its last two meetings, a top Fed official said Wednesday. In his first public remarks, recently appointed Dallas Fed President Robert Steven Kaplan said U.S.

monetary policy should remain accommodative for some time. He noted that maintaining easy policy does not necessarily mean holding the federal funds rate near zero, where it has sat since

the aftermath of the global financial crisis. Keeping rates near zero risks distorting investments and business decisions, Kaplan added. He noted that the Fed will normalize gradually.

Ex-Goldman exec Robert Kaplan named Dallas Fed chief Yellen: Proposed Fed law would be 'grave mistake' Traders have watched for hints of whether the Fed will raise rates at its

December meeting, and will get another clue Wednesday afternoon with the release of the policy-making committee's October meeting minutes. Traders have priced about a 72 percent chance

the Fed will hike in December, according to the CME Group's FedWatch. Kaplan, a former Goldman Sachs executive and Harvard Business School professor, sees GDP rising between 2 and 2.5

percent next year. That growth would reduce unemployment, though the U.S. economy is already near full employment, he said. Kaplan forecasts 1.8 percent inflation in 2016, followed by 2

percent in 2017. The Dallas Fed will not be a voting member until 2017.