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First on CNBC: CNBC Excerpts: Federal Reserve Bank of Minneapolis President Narayana Kocherlakota Speaks with CNBC’s Steve Liesman on “Squawk Box”

WHEN: Today, Friday, August 28th

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a FIRST ON CNBC interview with Federal Reserve Bank of Minneapolis President Narayana Kocherlakota on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000412466 and http://video.cnbc.com/gallery/?video=3000412468.

All references must be sourced to CNBC.

KOCHERLAKOTA ON CORE INFLATION

IT REMAINS VERY LOW. AND RELATIVELY TO OUR TARGET OF 2% INFLATION, OF COURSE, WE DON'T MAKE MONETARY POLICY TO TRY TO FIX INFLATION NOW. WE ARE TRYING AND MAKE SURE WE GET BACK TO TARGET IN THE FUTURE. BUT I THINK WHERE WE ARE NOW IS A GREAT INDICATOR IT'S GOING TO TAKE SOME TIME. BY MY ESTIMATION MORE THAN A FEW YEARS, TO GET BACK TO TARGET.

KOCHERLAKOTA ON INFLATION TARGET

THE CHALLENGE FOR US HAS BEEN THAT THERE IS A CONSTRAINT THAT WE DON'T TALK ABOUT IN TEXTBOOKS, THAT HAS BEEN EXTREMELY MATERIAL FOR THE LAST 7 YEARS NOW, I GUESS, IN THE U.S. AND THAT IS THE ZERO LOWER BOUND ON INTEREST RATES. AND THAT I THINK IS THE REAL CHALLENGE THAT WE ARE FIGURING OUT HOW CAN WE GET TO OUR TARGET, PROVIDE THE STIMULUS THAT IS REQUIRED TO GET BACK TO TARGET.

KOCHERLAKOTA ON INTEREST RATES

I DONT SEE A NEAR-TERM INCREASE IN INTEREST RATES AS BEING APPROPRIATE. BY NEAR TERM I MEAN REALLY THROUGH THE COURSE OF THE REST OF 2015. THE REASON I SAY THAT IS IF YOU LIFT OFF INTEREST RATES, GIVEN THE INFLATION OUTLOOK THAT WE HAVE, WHAT ARE PEOPLE GOING TO CONCLUDE? THEY'RE GOING TO CONCLUDE, AS YOU WERE JUST ARGUING, THE FED DOESN'T THINK IT CAN HIT 2%. IT IS NOT REALLY INTERESTED IN HITTING 2%. AND YOU'RE GOING TO START TO SEE OUR CREDIBILITY, IN TERMS OF PEOPLE'S BELIEFS ABOUT WHAT OUR LONGER EFFICIENT GOALS START TO SLIDE. AND YOU'RE ALREADY SEEING THAT IN MARKET DATA. SO THIS IS NOT SOME ECONOMIC THEORY, THIS IS ACTUAL REALITY.

KOCHERLAKOTA ON MORE EASING

THE SITUATION RIGHT NOW, CERTAINLY IS ONE, GIVEN OUR INFLATION OUTLOOK, IS ONE THAT WOULD CALL FOR CONSIDERATION OF THOSE KIND OF STEPS.

KOCHERLAKOTA ON GLOBAL RISKS

THIS IS WHERE I THINK THE MARKET VOLATILITY ACTUALLY DOES MATTER. IT'S NOT SO MUCH AS A CAUSE BUT AS A SIGNAL. I THINK IT'S A SIGNAL OF UNCERTAINTIES AT THE GLOBAL LEVEL, ABOUT GLOBAL DEMAND PARTICULARLY GOING FORWARD. I VIEW THOSE AS REPRESENTING A TAIL RISK TO THE U.S. OUTLOOK. IT DOESN'T AFFECT MY MODAL OUTLOOK FOR EITHER EMPLOYMENT OR PRICES, BUT I DO SEE IT AS JUST ANOTHER TAIL RISK THAT WE HAVE TO BE CAUTIOUS ABOUT. IT'S ANOTHER ARGUMENT FOR NOT BEING HASTY ABOUT REMOVING ACCOMODATION.

KOCHERLAKOTA ON U.S. ECONOMY

I WANT US TO GET BACK TO 3% GROWTH RATE. I'M FORECASTING IN 2016 WE'LL GET BACK TO 3%. BUT YOU KNOW, YOU TALKED ABOUT BOUNCE BACK IN THE SECOND QUARTER. YOU KNOW, THE FIRST HALF IS STILL PRETTY CLOSE TO 2% GROWTH. I'M OPTIMISTIC WE'LL BE ABLE TO DO BETTER THAN THAT IN 2016.

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