Fed's Kocherlakota: Fed Should Consider Easing, Not Tightening
August 28 2015 - 07:15PM
Dow Jones News
By Ben Leubsdorf
JACKSON HOLE, Wyo.----The Federal Reserve shouldn't raise
short-term interest rates this year and instead should consider
easing monetary policy to bolster sluggish U.S. inflation, Federal
Reserve Bank of Minneapolis President Narayana Kocherlakota said
Friday.
"It's definitely premature to be thinking about the removal of
accommodation in the form of lifting off, at least based on my
current outlook for inflation," Mr. Kocherlakota said in an
interview on the sidelines of the Federal Reserve Bank of Kansas
City's annual economic symposium here.
He said he doesn't see inflation returning to the Fed's 2%
annual target until 2018. Given that outlook, he said, further
easing is "worth considering, absolutely."
Mr. Kocherlakota, who will leave the Minneapolis Fed at the end
of the year to join the faculty of the University of Rochester, has
long argued the Fed should not raise interest rates this year.
Raising rates soon "would create profound economic risks for the
U.S. economy," he wrote in a Wall Street Journal opinion piece
earlier this month.
His comments Friday added to a wide range of views expressed in
recent days by Fed officials on the path forward for rates, which
have been pinned near zero since December 2008.
Most policy makers think the first rate increase will happen
this year, and it could come as soon as the Fed's Sept. 16-17
policy meeting. But volatility in financial markets and worries
about a slowdown in China have made some officials wary of moving
next month.
That public dialogue, Mr. Kocherlakota said, is a good
thing.
"Many public policy issues have this form of being technical,
complicated issues that policy makers have to struggle with, and
monetary policy is just another example," he said. "In a democracy
like the one we have, I think it's totally appropriate for the
public to be aware of what principles the policy makers are
thinking about and talking through."
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
(END) Dow Jones Newswires
August 28, 2015 19:00 ET (23:00 GMT)
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