HOUSTON (Reuters) - The Federal Reserve’s newest policymaker, Rob Kaplan, said on Wednesday that the U.S. central bank faces a ‘tricky situation’ with a global slowdown even as the U.S. approaches full employment, but stressed that keeping interest rates at zero has costs.
“It probably has become a little bit of a psychological barrier out there where people are just waiting for it to happen,” Kaplan said, referring to the Fed’s first rate rise. That in itself is not a reason to go ahead and raise rates, but it is something to be mindful of, he said.
The Fed will raise rates gradually, he said, adding that gradual to him means reassessing conditions after each rate hike and pausing before the next one if needed.
Reporting by Ann Saphir; Editing by Chizu Nomiyama