Dallas' Kaplan: Time To Start Talking About Taper

Dallas Fed Pres Kaplan (hawk, non-2021/22 voter) at a virtual event this morning expressed his view that the Fed should start talking about tapering bond buying soon, per wires in attendance at the event. He also said he hasn't changed his view (since the March FOMC) that the Fed should start raising rates in 2022.

• This language is possibly a step more hawkish than he expressed earlier this month, for instance with the WSJ when he said "I agree with what we're doing now in terms of asset purchases and stance of policy generally... I also, though... believe that as we're making progress toward meeting our goals, I think it would be much healthier -- the economy would be much healthier if we wean off these extraordinary measures."
• And it's a clear divergence from Chair Powell's blunt comment at the FOMC press conference this week: "No. It is not time yet" to talk about tapering.
• Not a huge surprise from Kaplan though considering his relative hawkishness amid FOMC members, and his view of strong progress in the economy this year (his 6.5% GDP growth forecast in 2021 has risks to the upside, he said today).
• And if he sees rate liftoff in 2022, you'd expect to be tapering well in advance of that, and Fed communications about it would have to start even earlier, with "talking" starting even before that. So it stands to reason.