- Kocherlakota Says Fed Hasn’t Reduced Real Interest Rate Enough Bloomberg - 4 hours ago
- Stock Market Update from Briefing.com Briefing.com via Yahoo! Finance - 2 hours ago
- Weale Says QE Scope Limited by Risks to Inflation Expectations Bloomberg - May 17 02:50am
- By Aki Ito & Tony Dreibus - May 17, 2013 12:24 PM PTFederal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed’s record stimulus hasn’t pushed down the real interest rate enough to meet its mandate to achieve price stability and full employment.
“The outlook for prices and employment is that they will remain too low over the next two to three years,” Kocherlakota said today during a panel discussion in Chicago. “Despite its actions, the FOMC has still not lowered the real interest rate sufficiently,” he said, referring to the Federal Open Market Committee.
Aiming to spur economic growth, the FOMC pledged on May 1 to keep buying $85 billion each month in bonds and to hold the benchmark interest rate near zero. Kocherlakota, who doesn’t vote on the committee this year, has called for stepping up stimulus to boost the expansion.Sponsored Links Leave the PBX behind, and switch to RingCentral Offic...No Cost & No Fee Loan. No SSN rqd. Easy Process! (2.5...If you owe less than $729k, you probably qualify for ...Buy a link
One way to fuel growth is to offer more guidance on the Fed’s policy intentions, the Minneapolis Fed chief said. While the FOMC has signaled “it’s going to be pretty hard” to raise rates as long as the jobless rate is above 6.5 percent, officials have been less clear about what they will do once unemployment falls to that threshold, he said.
U.S. stocks rose today after reports showed consumer sentiment improved. The Standard & Poor’s 500 Index increased 0.9 percent to 1,664.65 as of 3:20 p.m. in New York.
Kocherlakota said low interest rates may lead to volatility in asset prices, which may “pose macroeconomic risks.” While the Fed could tighten policy to mitigate those risks, it must also consider the costs of doing so for employment and inflation, he said.
“The gains from tightening related to improving financial stability are both speculative and slight,” he said. “Financial stability considerations provide little support for reducing accommodation at this time.”
To contact the reporter on this story: Aki Ito in San Francisco at aito16@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
end quote from:
Kocherlakota Says Fed Hasn’t Reduced Real Interest Rate Enough
Friday, May 17, 2013
Fed Hasn’t Reduced Real Interest Rate Enough
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment