Fed's Kaplan: Longer-than-needed excessive accomodation has side effects

Dallas Federal Reserve President Robert Kaplan said on Friday that he will not be preemptive in talking about QE taper until it's clear that the US has emerged from the virus, as reported by Reuters.

Additional takeaways

"We are going to have to shift our approach coming out of the virus."

"The question now for the Fed is to balance, how not to be preemptive or too reactive."

"Once it's clear we've weathered the virus, I will want to err on side of starting to remove extraordinary policies sooner than later."

"Excessive accomodation for longer than we need has side effects."

"Some of the inflation rise in coming months will be transitory but some may not be."

"I'll also be looking at excess risk-taking in financial markets."

"I'd like to see a sustainable achievement of employment, inflation goals."

"Equity market cap to GDP is historically elevated, credit spreads tight, housing market elevated."

"We do not have good visibility on non-bank financial markets."

Market action

These comments don't seem to be having a noticeable impact on the USD's performance against its rivals. As of writing, the US Dollar Index was up 0.17% on a daily basis at 92.22.