Former Dallas Federal Reserve President and ex-Goldman Sachs Vice Chairman Robert Kaplan believes the U.S. central bank is poised to trim interest rates in September, pointing to signs of a softer labor market and cooling demand.
Speaking on the economic outlook, Kaplan argued that headline unemployment figures mask underlying weakness. “Job creation has essentially stalled,” he said, adding that a tight labor supply, slowing consumer activity, and excess capacity in goods markets are all pushing toward looser monetary policy. He also highlighted disinflationary pressures from advances in artificial intelligence as another factor in favor of easing.
Not the start of an aggressive cutting spree
Kaplan cautioned that a September move shouldn’t automatically be seen as the start of a long rate-cut cycle. While markets are pricing in two to three reductions before year-end, he said the Fed is more likely to take a meeting-by-meeting approach. “A 25-basis-point cut could happen in September, followed by a reassessment,” he noted.
The former policymaker also downplayed the inflationary impact of recent U.S. tariff increases, saying most price pressures originate in the services sector rather than goods. Tariffs, he said, may cause a short-lived bump over the next year but are unlikely to fuel persistent inflation. Kaplan estimates the Fed has scope for a total of 75–100 basis points in cuts, potentially lowering the policy rate from its current 4.25–4.50% range to between 3.25% and 3.50%.
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