Robert Kaplan argues that with inflation at 2.75-3%, the neutral Fed funds rate is ~3.5-3.75%. Since the current rate is 3.75-4%, another cut would place policy at neutral, not accommodative. This is a risky position when inflation remains well above the 2% target, leaving no room for error.
Former Dallas Fed President Robert Kaplan suggests that while rate-setting policy will remain independent, a new Fed Chair could significantly alter balance sheet management. He anticipates a renewed debate about extending the portfolio's average maturity by buying more long-term bonds.
Robert Kaplan suggests the labor market's sluggishness might not be a simple cyclical slowdown. He points to a significant "matching problem" where open jobs don't align with the skills of job seekers. This structural issue limits the effectiveness of monetary policy as a solution.
Robert Kaplan cautions against dismissing inflation risks. Many businesses are still absorbing tariff costs or working through pre-tariff inventory. He believes the full price impact will be passed on to consumers in 2026, potentially keeping inflation stickier than markets currently expect.