If the Federal Open Market Committee followed the “rules” of economics, they would have tightened policy at their Aug. 9  meeting, according to Federal Reserve Bank of Minneapolis president Narayana Kocherlakota.

Comparing the economic situation in August to November, the last time the FOMC made a policy move, “measures of past and forecasts of future inflationary pressures were higher,” while “labor market slack and expectations of future labor market slack were smaller in August,” he told the National Association of State Treasurers in Bismarck, N.D., according to text released by the Fed.

Kocherlakota noted the monetary policy rules say: “'Don’t ease further if you’re doing better on your mandates.’ Indeed, they’d recommend that the level of policy accommodation be reduced.”

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