Robert Kaplan, vice chairman of Goldman Sachs (GS) and a former president of the Federal Reserve Bank of Dallas, told Bloomberg Television on Thursday morning that the rate-hike debate consuming markets this summer might not exist at all if not for a war. “In fairness, if we didn’t have the war in Iran and the spike in oil prices, which I think has raised headline inflation and leads into other items, my guess is we may not even [be] talking about the prospect of a rate increase,” he said.
That cuts against how the argument has been conducted all summer. The live question on trading desks has been whether the Federal Reserve’s next move is up rather than down, and it has been fought almost entirely in the language of domestic economics: tariffs, labor supply, and the pace of AI-driven capital spending. Kaplan, speaking hours after the latest inflation figures landed, put the cause somewhere else: in a barrel of oil.
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One thing about the speaker matters before leaning on the claim. Kaplan is not a serving Fed official and has not been one for years. He ran the Dallas Fed and now sits as a vice chairman at Goldman Sachs, describing the reaction function of an institution he no longer votes at. He is also among the most quoted Fed watchers alive, precisely because he used to sit in that room, and on Thursday he was willing to say what serving officials will not.
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He did not stop at the counterfactual. When asked what he would do in his former seat, Kaplan said the Fed was right not to raise rates in July, then delivered a sharper judgment on the decision before it. “I wouldn’t have cut in December either,” he said. “That last cut I would not have done.” A former regional Fed president calling a completed easing move a mistake on live television is not a dissent, but it is the closest thing to one on the record.
The mechanism is the oldest one in inflation. Crude oil feeds headline inflation directly through fuel and indirectly through everything that has to be moved, and the gap between headline and core carries his whole argument. If a spike stays penned inside energy, a central bank can look through it. If it “leads into other items,” in Kaplan’s phrase, it stops being a supply shock and becomes an inflation problem. He thinks some of that leaking has happened. Barchart has tracked the supply side all year, including the repeated talks to reopen the Strait of Hormuz that moved the price in both directions.
