Mpls. Fed chief has no inflation worries, wants to keep interest rates low


The president of the Federal Reserve Bank of Minneapolis added to the turnabout in his reputation Tuesday by reiterating that interest rates should stay in the basement until the nation's unemployment rate falls to 5.5 percent.

As the Star Tribune reports, the figure mentioned by Narayana Kocherlakota in a Golden Valley speech to financial planners is a full percentage point lower than the target set by the Fed's Open Market Committee last month.

The 5.5 percent rate is consistent, though, with what Kocherlakota offered in a speech last fall that surprised several economists. Once regarded as one of the Fed's foremost inflationary hawks, analysts are now putting Kocherlakota atop the ranks of doves who see no threat from inflation and think monetary policy should aim to stimulate growth.

Here is a link to the text of Kocherlakota's speech to the Financial Planning Association of Minnesota.

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Mpls. Fed chief: interest rates should stay low until unemployment falls to 5.5%

The president of the Federal Reserve Bank of Minneapolis has a reputation for being nervous about inflation and backing higher interest rates to guard against it. That's why some economists were surprised by his Thursday speech. Narayana Kocherlakota said -- as long as inflation is under control -- interest rates should remain at rock-bottom levels until unemployment falls to 5.5 percent.

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