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Kaplan, a non-voting member on the U.S. central bank's
rate-setting committee this year, said in a speech at Tsinghua
University in Beijing that bilateral discussions on trade issues
would likely move behind the scenes and won't be done publicly,
and the issues probably won't be resolved anytime soon.
Kaplan's comments come after Chinese President Xi Jinping
pledged earlier on Tuesday to further open China's economy and
cut tariffs this year, in a speech seen as an attempt to defuse
an escalating trade dispute with the United States.
Concerns about trade are legitimate issues that need to be
discussed, Kaplan said.
While U.S. officials, including President Donald Trump, have
recently expressed optimism that the two sides would hammer out
a trade deal, Beijing in recent days has said negotiations would
be impossible under "current circumstances".
The recent tit-for-tat tariffs between China and the United
States have fueled worries that it would affect global growth.
It is too soon to judge the impact of recent trade rhetoric on
the U.S. economy, Kaplan said, reiterating that the base case
was still for the Fed to raise interest rates three times this
year.
The U.S. economy will be relatively strong this year but the Fed
will have to be gradual and patient in raising rates in light of
headwinds, he said.
The Federal Reserve last month raised its target range for
short-term interest rates to 1.5 percent to 1.75 percent and
signaled it expects to increase rates two or three more times
this year to keep the U.S. economy from overheating.
Kaplan said he expects the U.S. economy to grow by 2.5-2.75
percent this year, unemployment to go lower and inflation to
gradually pick up toward the 2 percent target.
Unemployment has been at 4.1 percent for the last six months,
and wage growth, long subdued, has begun inching closer to the
3-percent annual pace of growth that economists say could signal
stronger inflation ahead.
Inflation, which has lagged the Fed's 2-percent target for
years, has also begun to pick up in recent months, and Fed
officials expect it to finally hit that goal and perhaps exceed
it by next year, if not before.
Economic growth next year will be a little weaker and will trend
down to 1.75 percent by 2020, Kaplan said.
(Editing by Jacqueline Wong)
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