Fed’s Kaplan: My guess is we will eventually start to see wage pressures

Fed’s Kaplan

• We see labor force falling inevitably to 61% (from 62.8%)
• Neutral is between 2.50-2.75%
• Everything shows there’s wage pressure
• The next 2-3 moves to me are clear but once we’re in the mid-2s, it’s tough
• After that it gets tougher
• Fed should continue to gradually remove accommodation
• An inverted yield curve would give me ‘great pause’
• The flatness in the yield curve tells me we’re late in the cycle
• I think the yield curve tells us that growth 3 years out will fall to 1.75%

Kaplan sounds very confident in hiking in June and September.