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Kaplan says rate hike may be appropriate in 'near future'

Federal Reserve Bank of Dallas President Robert Kaplan said Nov. 27 that he thinks it will likely be appropriate for the Federal Reserve Board to raise rates again in the "near future."

Kaplan, who backed the two hikes in the federal funds rate so far in 2017, wrote an essay outlining his views for Fed action as the Federal Open Market Committee prepares for its next meetings Dec. 12-13. Kaplan is a voting member of the FOMC this year.

Kaplan wrote that several indicators suggest the U.S. is now at or approaching full employment, noting the unemployment rate is now at 4.1% and raising concerns that the Fed could overshoot its full employment goal.

He said that although inflation is still lagging the U.S. central bank's 2% target, it will likely reach that goal "in the medium term." He also wrote the Fed can't wait "too long to see actual evidence of inflation," as that could eventually force the central bank to raise rates much faster and put the U.S. at risk of another recession.

"Taking all these factors into account, and from a risk management point of view, I believe it will likely be appropriate, in the near future, to take the next step in the process of removing monetary accommodation," he wrote. "This should be done in the context of an overall strategy of removing accommodation in a gradual and patient manner. I believe this strategy will increase the likelihood of sustaining and extending the economic expansion in the U.S."