Goldman Sachs vice chairman Kaplan, a former Dallas Fed president, said if
inflation stays elevated the Fed may need to raise rates as soon as September.
He said if inflation data does not cool between now and September, Fed action in
September or this autumn would be prudent. Markets turned more hawkish after Fed
chair Kevin Warsh signaled continued focus on fighting inflation; traders sold
short-term Treasuries, lifting near-term yields. Warsh’s comments were
reinforced by Fed members’ projections, with roughly half forecasting rate
increases before year-end. Kaplan warned persistent inflation would imply policy
remains too loose and noted Fed hikes rarely come as a single move — they
typically occur in series of two or three, so a September hike would likely be
followed by one or two more.
