UPDATE: Fed's Kocherlakota says he sees need for more accommodation
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(Updated - March 27, 2013 1:19 PM EDT)
Fed's Narayana Kocherlakota says he sees need for more accommodation.
In a speech today, Kocherlakota concludes:
"Monetary policy affects the economy with a lag of one or two years. Hence, a policymaker’s views about the appropriate level of monetary policy accommodation depend on his or her forecast for how the economy will evolve over the next year or two. My own outlook is that growth will remain moderate over the next two years. As a result, under current policy, my outlook for inflation is that it will run below the Fed’s target of 2 percent over the next two years and that the unemployment rate will be above 7 percent over that same period. That outlook suggests that the FOMC can better promote price stability and promote maximum employment, as mandated by Congress, by adopting a more accommodative policy stance. The FOMC could provide that additional accommodation in several different ways. In my remarks today, I’ve described one particularly simple approach: lowering the unemployment rate threshold in its forward guidance to 5.5 percent from the current setting of 6.5 percent."
Link to Speech
Fed's Narayana Kocherlakota says he sees need for more accommodation.
In a speech today, Kocherlakota concludes:
"Monetary policy affects the economy with a lag of one or two years. Hence, a policymaker’s views about the appropriate level of monetary policy accommodation depend on his or her forecast for how the economy will evolve over the next year or two. My own outlook is that growth will remain moderate over the next two years. As a result, under current policy, my outlook for inflation is that it will run below the Fed’s target of 2 percent over the next two years and that the unemployment rate will be above 7 percent over that same period. That outlook suggests that the FOMC can better promote price stability and promote maximum employment, as mandated by Congress, by adopting a more accommodative policy stance. The FOMC could provide that additional accommodation in several different ways. In my remarks today, I’ve described one particularly simple approach: lowering the unemployment rate threshold in its forward guidance to 5.5 percent from the current setting of 6.5 percent."
Link to Speech
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