Fed’s Robert Kaplan: Inflation Forces Remain Muted

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The president of the Federal Reserve’s Dallas district, Robert Kaplan, said that low inflation is here to stay.

In an interview with CNBC’s Steve Liesman last Friday, Kaplan stated: “It’s not that we don’t have any inflation…Inflation forces I think are going to be muted including technology.”

He added: “Technology enables disruption and to some extent globalization. Businesses have less pricing power today and this comes through in corporate earnings report and it comes through in all my conversations.”

His remarks came after Jerome Powell, the Chairman of the Federal Reserve, said last Wednesday that low inflation pressures are only “transitory,” hinting that a rate cut would not be on the horizon.

Kaplan also said that the economy of the United States is running out of workers after data come out last Friday revealing that the United States added a robust 263,000 new hires last April while the unemployment rate dropped to 3.6 percent, the lowest since December 1969.

Kaplan stated: “I think it’s still my view that we are running out of the capacity in the workforce.”

He added: “We are bringing people in off the sidelines. But we are starting to approach prime rates of participation pre-crisis and we are reaching pre-recession lows on discouraged workers in a good way. I would expect it’s going to slow down but I don’t think it’s going to be a bad sign.”