In a world where economic predictions are as reliable as a cat on a hot tin roof, Goldman Sachs’ vice chairman, Robert Kaplan, has decided to grace us with his thoughts. Apparently, if it weren’t for President Trump’s delightful little tariffs, the US economy would be experiencing a deflationary situation right now. Yes, you heard that right—deflation! The kind of thing that makes prices drop faster than a lead balloon.
Kaplan, who once held the prestigious title of president of the Federal Reserve Bank of Dallas (a title that sounds more like a cowboy movie than an economic position), shared his insights with CNBC. He mentioned that the recent inflation numbers are hinting at the possibility of rate cuts later this year. Because nothing says “stability” like cutting rates while juggling flaming torches.
“We’re in a disinflating world, and I think if it weren’t for these prospective tariffs that will flow through and are flowing through, I think the Fed would be on their front foot to be looking to cut rates now.” Ah, yes, the classic “if only” scenario. If only we had a time machine, we could go back and stop those pesky tariffs!
According to the Bureau of Labor Statistics, inflation rose by a modest 2.4% in May, which is slightly less than the 2.5% increase that economists had predicted. Because, of course, economists are never wrong—just ask them!
Kaplan, ever the optimist, noted that the Fed will be keeping a close eye on the tariffs over the next few weeks. “I think if I were at the Fed, it would encourage me that, after we get over the horizon, maybe the tariff impact could be more muted than I fear.” Because who doesn’t love a good game of economic hide-and-seek?
He also had some thoughts on Fed Futures, which are not, as one might assume, a sci-fi novel but rather a way to estimate the market-implied probability of changes to the Federal Reserve’s benchmark interest rate. “Directionally, what I make of the Fed Futures is the first meeting where there’s a real meaningful probability of a cut is September.” So, mark your calendars, folks! September is the new Christmas!
“So what I take from it, which I think is about right, is no action in June, unlikely in July.” In other words, the Fed is taking a summer vacation, and who can blame them? They’ve earned it!
“The Fed, though, it will likely prepare itself and prepare in its comments that it might take action into the fall. But we still don’t know what the tariff rates are, and we still have a budget and tax bill that has not yet been passed, and we’ll see over the summer what the details of that are.” Ah, the sweet sound of uncertainty—like a symphony played by a band of confused squirrels.
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2025-06-17 22:02