Fed's Kocherlakota: US interest rates are not low enough

Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, speaks in St. Paul, Minnesota, Feb. 16, 2010.
Craig Lassig | Bloomberg | Getty Images
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, speaks in St. Paul, Minnesota, Feb. 16, 2010.

U.S. interest rates, which the Federal Reserve have kept near zero since December 2008, are too high, a top Federal Reserve official said on Thursday, citing subdued inflation and "unacceptably high" unemployment as evidence.

"Interest rates are not low enough," Minneapolis Federal Reserve President Narayana Kocherlakota said at a Town Hall here. The fact that the Fed has not been able to achieve its twin objectives of maximum employment and 2-percent inflation shows that rates are higher than they should be, he said.

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Asked why then is the Fed reducing its bond-buying program, which is aimed at pushing down borrowing costs, Kocherlakota said he had no good answer.

"Given where we are with inflation, I think that it's challenging to know why we are removing stimulus from the economy at the rate that we are," he said.

By Reuters