Tags: Federal reserve | stimulus | inflation | Kocherlakota

Fed's Kocherlakota: Higher Inflation Shouldn't Stop Stimulus

Thursday, 17 October 2013 03:06 PM

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, who has backed record monetary stimulus, said policymakers should maintain low interest rates to reduce unemployment, even at the risk of temporarily pushing inflation above the Fed’s 2 percent goal.

The Federal Open Market Committee should be “willing to use any of its congressionally authorized tools to achieve the goal of higher employment, no matter how unconventional those tools might be,” Kocherlakota said in the text of prepared remarks given in Butte, Montana.

He said the Fed should signal it is prepared to do “whatever it takes,” including providing more stimulus, to rapidly bring down the jobless rate from August’s 7.3 percent.

The Fed shouldn’t be deterred by unusually high asset prices or economic growth that accelerates “above historical averages,” the Minneapolis Fed chief said.

Kocherlakota, who votes on the policy-setting FOMC next year, gave a similar speech on Sept. 26 in Houghton, Michigan.

U.S. central bankers are next scheduled to meet Oct. 29-30 after they unexpectedly refrained last month from dialing back their $85 billion in monthly bond purchases.

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Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, who has backed record monetary stimulus, said policymakers should maintain low interest rates to reduce unemployment, even at the risk of temporarily pushing inflation above the Fed's 2 percent goal.
Federal reserve,stimulus,inflation,Kocherlakota
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2013-06-17
Thursday, 17 October 2013 03:06 PM
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