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“We are going to grow in the neighborhood of 2.25-2.50 percent this year,” he said during an exclusive interview with FOX Business’ Edward Lawrence. “We’ll grow more slowly than last year, but we’ll still grow at solid rates. We think the labor force will tighten further.”
Federal Reserve officials signaled the inflation rate remained below the central bank’s goal of 2 percent during their two-day meeting earlier this month.
“While we’ve been running a below target, we think that headline inflation number is going to be gradually gravitating up toward 2 percent,” Kaplan said.
Policymakers at the central bank have said it’s willing to take a patient approach toward interest rates for “some time.”
Kaplan said he stands by the Fed’s patient approach on monetary policy in 2019.
“I am hesitant, while we are at or past full employment and the economy is running at solid rates, I am very mindful that adding further accommodation to the economy could crate excesses and imbalances which may be painful to deal with in the years ahead,” he said.
Based on the performance of the economy, Kaplan says, the central bank is at the right policy setting with a neutral federal fund rate.
“We refer to as a “neutral” means we’re neither accommodative or restrictive a neutral. I think we are in the neighborhood of neutral right now.”