DALLAS (Reuters) - The Federal Reserve should be cautious about any further interest-rate hikes, Dallas Federal Reserve President Robert Kaplan said on Friday, just two days after he voted with the majority of his colleagues to raise rates for the second time this year.
“We should be very careful about raising rates and we should do it patiently and carefully,” Kaplan said at a meeting of the Park Cities Rotary Club in Dallas, adding that he will need to see improvements in inflation, which has weakened in recent months.
Fed Chair Janet Yellen earlier this week expressed confidence that with the U.S. unemployment rate at a 16-year low of 4.3 percent, inflation will rise towards the Fed’s 2-percent goal over the medium term. Kaplan’s comments suggest that her confidence may not be fully shared by all her colleagues.
Kaplan also repeated his call for immigration reform, continued trade with Mexico and more global integration as ways to counter slow U.S. economic growth.
“I’d love to see our country make the right decisions on how we think about trade,” Kaplan said, adding that running a trade deficit with Mexico is different from running a trade deficit with some other countries like China because trade with Mexico boosts jobs and competitiveness in the United States.
The U.S. also needs to “come to grips” with immigration reform, he said, because immigrants have historically been big contributors to U.S. labour force growth.
Reporting by Ann Saphir; Editing by Chizu Nomiyama