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Fed's Kocherlakota-Lower US jobless rate may not trigger rate hike

Wednesday, 10 Oct 2012 | 3:59 PM ET

WASHINGTON, Oct 10 (Reuters) - The Federal Reserve could keep its benchmark interest rate low even if the U.S. jobless rate fell to 5.5 percent, Minneapolis Fed President Narayana Kocherlakota said on Wednesday.

Kocherlakota last month proposed a rule-based plan for keeping interest rates super low until either the jobless rate hit 5.5 percent or the Fed's medium-term inflation outlook hit 2.25 percent.

But on Wednesday he signaled he would support keeping that plan flexible.

"When the unemployment rate reaches 5.5 percent, the Fed could take into account a number of other economic conditions at that point in time," he told community and business leaders in Great Falls, Montana.

"So we could keep the fed funds rate low even though the unemployment rate has hit 5.5 percent," he said.

(Reporting by Jason Lange, editing by Gary Crosse)

((jason.lange@thomsonreuters.com; +1-202-310-5487, Reuters Messaging: jason.lange.thomsonreuters.com@reuters.net))

Keywords: USA FED/KOCHERLAKOTA FLEXIBLE