Comments from Kaplan ahead of today's Federal Open Market Committee (FOMC) meeting. Kapaln argues that fiscal policy is what is preventing inflation from falling and the Federal Reserve for cutting rates:

  • one of the reasons why the Fed is struggling to be able to cut rates and why service sector inflation and wages are so sticky, is excessive government spending
  • the inflation rate on goods is today very, very low ... the supply chain issues have gotten worked out
  • the inflation issue today is almost exclusively in the not totally but almost exclusively in the service sector ... we've got a very sticky labor force cost issue (ps. US employment cost Index for Q1 comes in at 1.2% versus 1.0% expected)

Kaplan's recommendation not to the Fed, but government:

  • slow down implementation of the inflation reduction act and infrastructure act projects, not cancel but slow, and let's wrestle this inflation issue to the ground

Kaplan spoke with CNBC, interview is here:

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The Federal Open Market Committee (FOMC)'s policy decision will be released on Wednesday May 1 at 2 pm US EDT (1800 GMT) with Fed Chair Jerome Powell following up with his press conference at 2:30 pm (1830 GMT).

Earlier previews: