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The Fed: Fed’s Kaplan says firms lack pricing power

Krisztian Bocsi/Bloomberg
Dallas Fed President Robert Kaplan

Wage and inflation pressures are building but firms are having a tough time passing those prices to their customers given the impacts of automation and globalization, said Dallas Fed President Rob Kaplan on Monday.

“Pricing power of businesses is more limited than we’re historically accustomed to seeing at this stage in an economic expansion,” Kaplan said, in one of his periodic essays about the economic outlook.

Lack of pricing power could keep consumer inflation moderate, meaning that interest rates may not have to rise sharply.

Kaplan didn’t discuss his outlook for rates in his essay, but told Bloomberg in an interview earlier this month that he sees the Fed raising its target rate twice more this year.

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