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In a blog post published on the Federal Reserve Bank of Dallas’ website, Dallas Fed President Robert Kaplan argued that the US labor market is tighter than the level of employment currently suggests.

Commenting on the implications for the monetary policy, “we wish to suggest that policymakers should be cognizant of a range of supply factors that may currently be weighing on employment,” Kaplan wrote.  “These factors may not be particularly susceptible to monetary policy.”

Kaplan further reminded about the possibility of labor supply increasing less than expected and urged policymakers to keep that in mind while assessing the appropriate policy stance.  

Market reaction

The US Dollar Index inched slightly higher following this publication and was last seen posting small gains at 90.06.