Robert Kaplan is the new leader of the Federal Reserve Bank of Dallas. He’s filling the formidable shoes of Richard Fisher, who was an outspoken voice against many of the Fed’s moves since the financial crisis.
Kaplan sat down with KERA’s Rick Holter to talk about the Fed’s next move: possibly raising interest rates.
Interview Highlights: Robert Kaplan…
…On the factors the Federal Reserve Bank is considering for raising interest rates:
“There are two main criteria we look at: one is employment, and the other is referred to as price stability or inflation.
We’re at five percent unemployment in this economy. I think there's probably still some slack in the labor market…but I think everything I see shows that we're well on our way to meeting that objective.
Inflation on the other hand been trickier. We have a two percent inflation target. We've been well below it…We're still optimistic that over the near to medium term, we’ll gradually move up to two percent. I also think there is a real cost to being at zero [percent in the federal funds rate]…being had zero is not costless, it costs in terms of distortions and trying to begin to normalize, I think, would be a healthy and useful thing for us to do.”
…On the Texas economy during the economic crisis:
“The headline is how resilient Texas has been despite a precipitous drop in oil and oil prices. The state has a number of features that help explain the resiliency.
One, the economy is much more diversified then it has been.
Also, the state has had higher level of migration and population growth than the rest of the country. The state has grown about one percent faster than the rest of the United States on average since 2000. That is really significant. I'm optimistic and believe that migration and population growth is going to continue. More companies are likely to relocate here.
In the near term, we're clearly suffering through the fact that there's an oversupply of oil in the world. When you look at what's going to have to happen for supply demand to get in the balance, we think it could still be another year-and-a-half to two years before it does.”
…On criticism of his appointment to the Federal Reserve Bank of Dallas:
“I understand why people are sensitive because of what just happened in the financial crisis and the bailouts. I think only I can say to people is, as they get to know me and I spend time in this state and in this district and in the country, I think they'll see that I'm focused on adding value to this community. Give me a chance, get to know me, and then judge me based on the job I do.”
Robert Kaplan is the new chief of the Federal Reserve Bank of Dallas.