December 1, 2017 / 4:29 PM / a year ago

Fed's Kaplan says flattening yield curve may impact rate hikes

Dallas Federal Reserve Bank President Robert Kaplan smiles during the True Economic Talks event in Mexico City, Mexico, July 14, 2017. REUTERS/Edgard Garrido

MCALLEN, Texas (Reuters) - Dallas Federal Reserve Bank President Robert Kaplan on Friday said the narrowing gap between the long-term and short-term U.S. interest rates reflects expectations of slow growth and could impact the pace of rate hikes.

“To the extent as the yield curve flattens for me it means we have a little less operating flexibility at the Fed and certainly and it will be a factor for me what we do with the Fed funds rate,” Kaplan told reporters after an economic development event here, adding that the yield curve will move in part as a result of what the Fed does with rate hikes. “This is one of several reasons why I’ve said any removal of accommodation is going to have to be done patiently and gradually, and this will be one of the factors I’ll be taking into account.”

Reporting by Ann Saphir

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