Kocherlakota in no hurry to boost rates

A "necessary condition" for rate hikes, says Minneapolis Fed boss Kocherlakota, needs to be a one-to-two year inflation outlook at 2% or more, and he currently sees the probability of this happening as "considerably lower" than the chance of inflation coming in below target.

Willing to have inflation run at above 2% for some time to help employment, Kocherlakota says it's kind of a moot point for now since inflation is running so low.

As for employment, the headline stats are masking a still-weakish situation. The decline in unemployment has much to do with lower labor force participation, and thus the Fed is failing to meet its job creation goal.

The minutes of the most recent FOMC meeting are due at 2 ET.


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Comments (1)
  • User 28313403
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    There is not much point in talking about Kocherlakota's dovish view on inflation since he will NOT be a voting member of the FOMC in either 2015 or 2016, when it will count. On the other hand, Lacker's comment yesterday that the Fed should be "pre-emptive" in its guard against inflation should not have been ignored by market participants because he WILL be a voting member in 2015! Markets have not fully discounted the increasing risk of Fed tightening action (be it a FF rate increase or maybe some balance sheet operation) in the first half of 2015, especially the Treasury market.
    9 Jul 2014, 09:35 AM Reply Like
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