The Fed may have to increase rates before 2014 but for now accommodation is appropriate, Federal Reserve Bank of Minneapolis president Narayana Kocherlakota said Tuesday.

The decline in household worth as a result of the financial crisis negatively affected demand and productive capacity, but "over the past four years, the [Federal Open Market Committee's] highly accommodative policy has been successful at keeping demand close to productive capacity, as is evidenced by how close inflation has been to 2%. I see no need for additional accommodation at this time, and I believe that conditions will warrant raising rates well before the end of 2014," Kocherlakota told the Southern Minnesota Initiative Foundation, according to text of his prepared remarks released by the Fed.

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