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Fed's Kaplan says hard to know how high rates can rise

Published 05/05/2016, 07:50 PM
Updated 05/05/2016, 08:00 PM
© Reuters. The  Federal Reserve building in Washington

PALO ALTO, Calif. (Reuters) - Dallas Federal Reserve President Robert Kaplan said Thursday that one of the biggest roadblocks to setting a monetary policy rule is the difficulty knowing where interest rates should be when the economy is at full employment and inflation stable.

"Ideally we’d be very clear in articulating what’s driving our policy decisions," Kaplan said at the Hoover Institution's annual monetary policy conference. But sticking to a monetary policy rule based on economic data is difficult, he said, in part because of drops in both the unemployment rate associated with full employment and the interest rates associated with a fully healthy economy.

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