NEW YORK – Dismissing the need for further monetary policy accommodation, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said in a televised interview he is “slightly more upbeat” about economic growth next year and unless the forecast for inflation “softens considerably” while unemployment rises there’s no need for Fed action.
But, he sees “continued progression” in the battle against unemployment, but “not as fast as we’d like to see.”
The measures of slack, excluding long-term unemployment, are near levels of 2004, suggesting no further help is needed at this time, he said. Further easing to lower the long-term unemployment rate would come with unpleasant trade-offs that might be too costly.
“The question is, ‘will the Fed raise rates sufficiently rapidly to keep inflation under control?’” he said in an appearance on CNBC-TV. “And the answer is, of course, ‘yes.’”
At this point, Kocherlakota said, “We have to be clear about what our objectives are in terms of employment and inflation and then we have to be clear about the strategy we’re using to try to achieve these goals.”
Objecting to the term “inflation hawk,” Kocherlakota termed himself a “consistency hawk” and “credibility hawk.” It’s important, he said, “people believe we’re going after the things we say we’re going after.”
