Overview
- Kaplan publicly backed the Fed’s July 29 decision to keep the federal funds range at 3.50%–3.75% and said officials should stay open‑minded before the September meeting.
- He pointed to mixed inflation signals as a reason for patience, citing a slowdown in the producer price index and a 0.1% rise in July consumer prices that left annual CPI at 3.4%.
- Kaplan warned that the bigger risk is higher long-term Treasury yields, saying a structural gap between heavy government borrowing and investor demand is pushing 30‑year yields up.
- Markets reflected that split view by pricing a stronger chance of no September hike even as the Aug. 13 $25 billion 30‑year auction yielded about 5.22%, the highest for that maturity since 2001.
- He urged Fed Chair Kevin Warsh to use his Jackson Hole address to explain the July hold so investors understand the reasoning behind a more data‑driven, flexible policy approach.