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Fed's Kaplan sees U.S. inflation rising but not 'running away'

Reuters  |  NEW YORK 

By Richard Leong

NEW YORK (Reuters) - U.S. is rising toward the Federal Reserve's two percent goal while not accelerating enough to suggest the is overheating, said on Tuesday.

is approaching two percent but it's "not running away from us," he said at an event titled "Energy, Trade, and Energy Growth" sponsored by the

data for April indicated further growth on domestic wages and consumer prices although they fell short of market expectations.

Kaplan, who is not a voting member of the in 2018, said he expected the U.S. to grow about 2.50 percent to 2.75 percent in 2018, underpinned by the biggest tax overhaul in 30 years enacted last December.

He cautioned the tax boost would fade in 2019, slowing to 1.75 percent to 2.00 percent growth rate by 2020.

With businesses expanding and the consumer sector in "pretty good shape," Kaplan said the Federal Reserve will likely stay on track to raise key overnight borrowing costs at a gradual pace.

He told reporters after the event that he was not committed to whether the Fed would raise short-term interest rates two or three more times in 2018.

Interest rates futures implied a more than a 50 percent chance would increase rates by year-end to bring its target range to 2.25-2.50 percent, according to CME Group's FedWatch program.

The FOMC, which is scheduled to next meet on June 12-13, last raised its federal funds rate to 1.50 to 1.75 percent in March.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, May 15 2018. 20:57 IST