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Kaplan from the Fed considers the low yield of bonds an occasion to think twice before raising the rate

Financial markets warn of the weaknesses of the U.S. economy.

18.Aug.17 11:33 AM
By Daria Zaytseva


Kaplan from the Fed considers the low yield of bonds an occasion to think twice before raising the rate

So the Fed must be very "patient and judicious" when deciding to raise rates, said the head of the Federal Reserve Bank of Dallas Robert Kaplan on Thursday.

Speaking at a press conference, Kaplan voiced his concern about a series of disappointing inflationary data, saying he wants to make sure that this indicator stabilizes "in the medium term" before he comes out in support of raising rates.

The minutes of the July meeting of the U.S. Central Bank pointed to the contradictions between those regulator officials who believe that the sluggish price trend is a temporary phenomenon and should not hinder plans to tighten up policy, and those that like Kaplan want to wait for now.

Some investors believe that the yield of bonds is unusually low, given that the Fed has raised the rate three times since December. This may signal expectations of a slowdown in the growth of the economy or simply result from exceeding the forecasts of economic growth in Europe and other countries.

U.S. stock markets, which respond to comments by Federal Reserve officials about financial markets, played part of the large-scale losses after Kaplan's speech. Although the Fed predicts another rate hike by the end of the year, investors estimate this probability at 40 percent.

The head of the Federal Reserve Bank of Cleveland Loretta Mester on Wednesday voiced the opposite position.

The inflation indicator, on which the FRS relies, is at the level of 1.5 percent, that is below the 2 percent target.

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