Interest Rates

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

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