From the WSJ:
One member of the troika who opposed the Federal Reserve‘s recent decision to keep rates at rock bottom levels for two years suggested he won’t be repeating his disagreement at coming central bank gatherings.
In a speech, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said Tuesday “I see no reason to revisit the decisions” made last month, and added “I plan to abide by the August 2011 commitment in thinking about my own future decision.”
The reason? With the Fed having made its pledge, “I believe that undoing this commitment in the near term would undercut the ability of the Committee to offer similar conditional commitments in the future.”
While Kocherlakota appeared to suggest his dissent was unique, he didn’t show his hand as to what he wants future policy to look like. He said only that “the case for any additional easing would have to be made on its own merits.”
That said, the official spent a considerable amount of his speech — his comments came from remarks prepared for delivery before the National Association of State Treasurers in Bismarck, N.D. — explaining why he did not think the Fed made the right decision on its forward interest rate commitment. He indicated there was even a case to be made for going the other way on policy and tightening it.
Someone care to explain?
Update: I didn´t say it before because I didn´t want to appear to be a teaser. But I just knew that Steve Williamson would come out and say Kocherlakota made “sense”. Just found out he did in a comment to Mark Thoma´s post:
1. The “doves” and “hawks” language is too simplistic, and does not get at what the dissent seems to be about. What Kocherlakota said in this instance makes sense.
2.Once the committee has committed to the policy and he’s registered his dissent, there’s no point in saying it again. It’s not like a typical pre-crisis sequence of meetings where there is a decision to be made at each meeting, and a possible dissent in each case.
Note that he didn´t venture “making sense” of Korchelakota´s tightening bit!