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Minneapolis Fed chief wants stronger steps to spark job creation

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The president of the Minneapolis Federal Reserve Bank may be out of step with his peers, but he insists policymakers should be doing more to stimulate job growth.

In a speech to the Greater Rochester Chamber of Commerce Tuesday Narayana Kocherlakota said cutting interest rates even lower is among the options the Fed should consider, Reuters reports. The Fed's short-term policy rate has been at one-quarter of one percent or lower since December of 2008, Reuters says.

Kocherlakota says the Fed should be thinking about pushing it even lower, adding "It's really about demonstrating a commitment to stay with the recovery for as long as it takes to get the economy fully recovered."

The Business Journal reports Kocherlakota says the U.S. unemployment rate of 6.7 percent is unusually high. He would also like to see the inflation rate nudged from its current one percent up to two percent.

He says that would be healthier for the economy, but tells the Wall Street Journal a return to two percent inflation could take about four years.

Kocherlakota is a voting member of the Federal Open Market Committee, which guides the country's monetary policy. Recently he's been something of a lone wolf on the central bank.

As RTT News notes, he cast the only dissenting vote at the March meeting where the Fed voted to reduce its bond purchases, which are aimed at helping to stimulate the economy. Reuters says current Fed policy calls for phasing out those bond purchases entirely by the end of the year, a move Kocherlakota opposes.

RTT characterized Kocherlakota's call for more job creation as a positive development on a day when investors seemed to be hunting for bargains on the market and biding time until earnings reports are released.

Find the full text of Kocherlakota's remarks here.

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