UPDATE 1-Fed should not overreact to Friday's Q2 U.S. GDP data -Kaplan
(Adds details, quotes, background)
By Lindsay Dunsmuir
ALBUQUERQUE, N.M., July 29 (Reuters) - The Federal Reserve should not overreact to Friday's weaker-than-expected U.S. GDP report, but needs to consider more data before contemplating another interest rate increase, a top Fed policymaker said.
"You can't overreact to any one data point ... this number will get revised," Dallas Fed President Robert Kaplan told reporters in Albuquerque, New Mexico after speaking to a community bankers association.
He added that he would looking for "continuing improvement and forward momentum in GDP, an improvement in the labor market and some progress on inflation" from now until the U.S. central bank's next policy meeting on Sept. 20-21.
Earlier on Friday, the Commerce Department reported that the U.S. economy grew at a 1.2 percent annual rate in the second quarter, much less than expected, as inventory investment fell for the first time in nearly five years.
Kaplan, who is not a voting member of the Fed's policy-setting committee this year but participates fully in its deliberations, declined to comment when reporters asked him how many rate rises he expects in 2016.
Describing himself as "forward leaning" in wanting to raise rates, Kaplan nevertheless added that "you can't force it." He added that he continued to think rates should be raised gradually and patiently.
Other Fed policymakers also have emphasized that any further rate increases will be cautious and gradual given that an uncertain global backdrop could result in slower U.S. economic growth for years to come. Continuación...