Fed official: Stock market a shaky gauge

Federal Reserve Bank of Dallas President Robert Kaplan said Wednesday that while policymakers are watching stock market swings, the moves may not reflect the underlying economy and officials shouldn’t overreact.

“This has been a very tough start to the year,” Kaplan said in an interview on Bloomberg Television with Michael McKee. “You’ve got to watch these market moves, but you’ve got to realize that they may or may not reflect what’s going on with the underlying economy in the United States.”

The Fed is gauging progress toward its dual mandate of stable inflation and maximum employment as it weighs when to raise interest rates again, having lifted the federal funds rate in December for the first time since 2006. The decision on a second increase may be complicated by gyrations in global equity markets and weakness abroad.