According to Reuters:
The Federal Reserve’s policy of zero interest rates and asset purchases is appropriate, perhaps even insufficient, given forecasts for weak economic growth and low inflation for years to come, a top central bank official said on Thursday.
The U.S. economy will continue to expand too slowly over the next two years to bring down unemployment substantially, said Narayana Kocherlakota, president of the Minneapolis Fed.
“Inflation will run below the Fed’s target of 2 percent over the next two years and the unemployment rate will remain elevated. This forecast suggests that, if anything, monetary policy is currently too tight, not too easy,” he told a meeting sponsored by Minneapolis Fed.
Kocherlakota predicts U.S. gross domestic product will expand at an annual pace of 2.5 percent in 2013 and 3 percent next year, estimates that put him on the low end of Fed policymakers’ forecasts.
“This growth will do little in terms of returning the economy to the historical trend,” Kocherlakota said in prepared remarks to a Minneapolis Fed event. “Consistent with this slow output growth, I expect unemployment to continue to fall only slowly.”
Over the last three years no monetary , or for that matter, any official has revised his position as drastically as Kocherlakota.
If only a few more could be so open minded…
Note: If you “renege” you get “slapped”. That´s what Steve Williamson did a few months ago, saying: The new Kocheralakota seems to be a flimsy-excuse guy.
HT: Patricia Stefani
“The new Kocheralakota seems to be a flimsy-excuse guy.”
I suppose people say things like this when one abandons a previous position whilst not necessarily taking another. Kocheralakota keeps talking about the dismal economic performance ahead, giving subtle hints that something isn’t quite right without staking a claim to what that might be or how to fix it. Big problems require bold solutions – wishy-washy just won’t do. When he starts talking about making up the NGDP gap and keeping it closed, then he can be considered redeemed.