Dallas Federal Reserve Bank President Robert Kaplan on Wednesday said that while it’s a “healthy thing” that the incoming administration is planning structural reforms, any new fiscal policies must take into account rising public debt.
Kaplan urged “appropriate” policies that focus on boosting productivity and labor force growth but do not add too much to budget deficits and debt that are already on an unsustainable growth path. He forecast 2.3 percent growth this year even without any fiscal stimulus, and said the Fed should be removing accommodation by raising rates and, later this year or next year, possibly shrinking the Fed’s massive balance sheet. Kaplan has a vote this year on interest-rate policy.
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