Despite the repeated assurances by several officials about the extended dovish outlook, Robert Kaplan, President of the Dallas Fed, remains optimistic that the US central bank could implement a rate hike before the end of next year. Kaplan had shared a similar expectation during the March meeting of the Fed as well.

He expressed hope that the Fed could achieve its target of 2% inflation while employment could rebound to pre-pandemic levels by the end of 2022, prompting a relook at the original plans to remain dovish until 2023. At the latest meeting as well, even as the US economy showed signs of recovery, the Fed maintained its plans to continue holding interest rates close to 0 and stay on course with its bond purchase program to help the economy.

Kaplan shared these thoughts at a virtual town hall organized by the Dallas Fed, adding, “I haven’t seen anything from that point to today that’s changed my view.” He is considered one of the more hawkish among the Fed officials, and his comments about tapering off asset purchases sooner than later were in line with his hawkish outlook.

Speaking on inflation, Kaplan was aligned with other Fed officials when stating that price rise due to imbalances driven by the pandemic should ease lower by this fall. However, in case inflation levels remain elevated towards the end of the year and drive disruptions to recovery, the central bank could consider implementing some measures.