Odd Lots Rob Kaplan on the Fed, AI, and How Globalization Is Happening Without the US
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Sep 12, 2025 
Rob Kaplan, the former president of the Dallas Federal Reserve Bank and current vice chairman of Goldman Sachs, shares fascinating insights on the Fed's path for interest rates and the macroeconomic landscape. He discusses the escalating AI race between the U.S. and China, along with the evolving dynamics of globalization that appear to be advancing without U.S. leadership. Kaplan also delves into the complexities of Federal Reserve independence amid political influences, and how these factors shape economic predictions and market responses.
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Fed Likely To Opt For Cautious 25bp Cut
- Rob Kaplan thinks a 50bp cut is unlikely because jobs aren't collapsing and inflation remains above target.
- He expects a 25bp cut is more likely to start a cautious easing cycle if labor weakness persists.
Limited Room To Cut To Neutral
- Kaplan says the Fed would have stood pat absent labor weakness because inflation isn't moving toward target.
- He estimates neutral rate near 3.5%, implying limited room to cut (75–100bps max).
Markets Price AI Gains; Fed Must Focus On Today
- Financial markets price multi-year gains from AI and productivity improvements, not current macro conditions.
- Kaplan argues the Fed should set policy on today's economy, not the market's multi-year bet.