Bar would be high for me to move rates in October, says Fmr. Dallas Fed President Robert Kaplan

ELECTION IN NOVEMBER. I DON'T KNOW IF THAT HAS ANYTHING TO DO WITH THE THINKING ABOUT OCTOBER. MAYBE THEYUS W WANT TO WAIT FOR THTHTHTATA. I DON'T WANT TO PUT MY TINFOIL HAT BACK ON. STEVE LIESMAN, THANK YOU. APPRECIATE IT. ALL RIGHT. LET'S TALK ABOUT ALL OF THIS AND BRING IN FORMER DALLAS FEDERAL RESERVE PRESIDENT GOLDMAN SACHS IS NOW ROBERT KAPLAN. ROBERT, GREAT TO SEE YOU AGAIN. >> GOOD TO SEE YOU, BRIAN. >> THANKS FOR JOINING US. WHAT DO YOU MAKE OF THAT. OCTOBER REDUCED DOWN. DECEMBER UP. COULD THAT BE POLITICAL OR IS THAT MORE LET'S JUST WAIT AND SEE HOW THE DATA COOKS OUT. >> I THINK MORE THE LATTER. FOR ME, IF I WERE IN MY OLD SEAT, THE BAR WOULD BE HIGH TO MOVE IN OCTOBER. IT DOESN'T. IT'S NOT THAT I WOULDN'T DO IT, BUT I NEED TO SEE MORE EVIDENCE. WHY IS THAT? WHILE THE ECONOMY IS STRONG, IT'S POWERED MAINLY BY ALL THINGS RELATED TO AI, EITHER INFRASTRUCTURE ADOPTION, DEFENSE SPENDING AND INTEREST SENSITIVE SECTORS, AND LOW MODERATE INCOME CONSUMERS. I WOULD ARGUE THOSE SECTORS ARE SLUGGISH. AND THE OTHER COMMENT IS THE CORE INFLATION READINGS ARE A LITTLE BIT CALMER. HEADLINE INFLATION BECAUSE OF OIL IS MORE ELEVATED. I WOULD LOVE TO TAKE A LITTLE BIT MORE TIME TO SEE HOW THAT SHAKES OUT. I WANT TO BE MORE DELIBERATE HERE. AND SO I WOULDN'T MIND SKIPPING OCTOBER RIGHT NOW AND THEN LOOKING AT MOVING IN DECEMBER. AND I THINK THAT'S WHAT JOHN WILLIAMS SAID YESTERDAY. AND I BASICALLY AGREE WITH HIM. >> NO URGENCY. THEN ON THE INFLATION SIDE. >> I THINK LISTEN, I DON'T I DON'T AGREE WITH THAT. THERE'S A FEELING OF URGENCY BECAUSE WE'RE ABOVE TARGET AND WE'VE BEEN THERE FOR A WHILE. BUT I DON'T WANT THAT TO CAUSE ME TO ABANDON MY JUDGMENT AND MAKING SURE I MAKE THE RIGHT DECISIONS SO THEY FEEL THE URGENCY. BUT I THINK I WOULD BE INCLINED TO BE MORE DELIBERATE. AND I DON'T SEE A PROBLEM IF IF THE IF WE DON'T SEE A COMPELLING REASON TO MOVE IN OCTOBER, I'D RATHER WAIT TILL DECEMBER. >> YEAH, WE'VE BEEN ABOVE TARGET FOR SIX YEARS. LET'S LET'S SWITCH GEARS. THE BOND MARKET DID NOT WAIT FOR THE FED KNOW THE BOND MARKET. AS STEPHANIE SAID IN THE LAST BLOCK. SHE SAID THAT WE'VE GONE UP 1% OVER 100 BASIS POINTS, 1% TO THE TO THE LAYMEN OUT THERE. THE BOND MARKET MOVED. IS THE BOND MARKET SEEING SOMETHING, OR DID THE BOND MARKET SEE SOMETHING THAT THE FEDERAL RESERVE DID NOT? >> I THINK THE BOND MARKE I THINK I BELIEVE IS IS PRICING IN A COUPLE OF THINGS. NUMBER ONE, IT DOESN'T IT'S STILL NOT SURE IT UNDERSTANDS. KEVIN WARSH AND HOW TO DECIPHER KEVIN WARSH. REMEMBER THE DOT PLOT MEDIAN WAS TWO HIKES, INCLUDING DECEMBER. BUT IMMEDIATELY AFTER THE PRESS CONFERENCE THE MARKET PRICED IN MORE LIKE 100 BASIS POINTS IN HIKES. I DON'T THINK THEY'RE SURE HOW TO DECIPHER KEVIN WARSH. AND THEY'RE BUILDING IN A RISK PREMIUM FOR THAT. AND THEN THERE'S THE SECOND THING. THERE IS A TAIL RISK THAT THE WAR AND DIESEL COULD BE ELEVATED FOR FAR LONGER THAN WE MAY THINK. IF THAT'S TRUE, THEN THEN DIESEL, FOR EXAMPLE, IS GOING TO BLEED AND IS ALREADY STARTING TO BLEED INTO 30 OR 40 ITEMS. AND I THINK THEY'RE PRICING IN A RISK PREMIUM IS. >> ACTUALLY TWEETING ABOUT THAT EARLIER TODAY BECAUSE DIESEL IS GREATLY IMPACTED BY WHAT'S HAPPENING WITH IRAN AND HORMUZ, BUT IT'S MAYBE AS MUCH OR MORE BEING IMPACTED BY WHAT'S HAPPENING IN RUSSIA AS UKRAINE. DESERVEDLY SO, BY THE WAY, KEEPS POUNDING. ABOUT 50% OF RUSSIAN REFINERIES ARE EITHER FULLY OFFLINE OR DAMAGED AND RUNNING AT REDUCED CAPACITY. THERE'S NO INDICATION, EVEN IF IRAN SETTLES DOWN, THAT RUSSIA AND WHAT'S HAPPENING THERE WITH UKRAINE IS GOING AWAY ANYTIME SOON. SO HOW DOES THE FED FACTOR IN THAT TYPE OF THINKING? >> IT'S GOT TO MONITOR IT CAREFULLY, BECAUSE IF YOU WANT TO SHIP ANYTHING IN THIS COUNTRY, FOOD, YOU NAME IT, YOU'RE GOING TO USE DIESEL AND OTHER OIL DERIVATIVES. AND SO THE THAT'S WHY THE FED IS GOING TO WATCH THIS CAREFULLY. AND THAT'S WHY IT COULDN'T WAIT. IT HAD TO ACT IN SEPTEMBER. IT'S GOING TO BE PREPARED TO ACT AGAIN. THE ONLY ISSUE IS, I THINK IN THEIR MINDS, THEY'RE GOING TO MOVE TWICE THIS YEAR IN THE DOT PLOT AND MAYBE MOVE AGAIN IN EARLY 27. >> I THINK THREE HIKES. >> WE MAY GET THREE ALL TOLD, INCLUDING SEPTEMBER. >> QUARTER POINT EACH. >> YES. BUT WE'VE ALREADY GOTTEN ONE THAT GETS YOU TO FOUR AND A QUARTER, FOUR AND A HALF. THE MARKET HAS ALREADY JUMPED AHEAD OF THAT, AND I THINK THE MARKET MAY BE OVERESTIMATING WHAT THE FED ACTUALLY DOES, BUT TIME WILL TELL. >> SO QUICKLY. WILL BOND YIELDS FALL ONCE WE START GETTING MORE? I KNOW IT SOUNDS COUNTERINTUITIVE, BUT IF THE BOND MARKETS AHEAD OF THE FED. >> YOU NEED YOU NEED YOU NEED OIL AND DIESEL TO SETTLE BACK DOWN WOULD HELP. AND I THINK THE BOND MARKET IS IS BUILDING IN RISK PREMIA MORE THAN USUAL. AND IT'S BECAUSE OF THESE ISSUES WE JUST TALKED ABOUT. >> WELL I'LL OPINE ON THE