Fed Member Kocherlakota Says Interesest Rates Not Low Enough

U.S. interest rates, which the Federal Reserve have kept near zero since December 2008, are too high, a top Federal Reserve official said on Thursday, citing subdued inflation and “unacceptably high” unemployment as evidence.

“Interest rates are not low enough,” Minneapolis Federal Reserve President Narayana Kocherlakota said at a Town Hall here. The fact that the Fed has not been able to achieve its twin objectives of maximum employment and 2-percent inflation shows that rates are higher than they should be, he said.

Asked why then is the Fed reducing its bond-buying program, which is aimed at pushing down borrowing costs, Kocherlakota said he had no good answer.

“Given where we are with inflation, I think that it’s challenging to know why we are removing stimulus from the economy at the rate that we are,” he said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza