Fed's Kocherlakota: No need to fear monetary stimulus

ST. PAUL, Minnesota Tue Nov 12, 2013 2:17pm EST

Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks at a macro-finance conference hosted by the Boston Federal Reserve Bank and Boston University in Boston, Massachusetts November 30, 2012. REUTERS/Brian Snyder

Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks at a macro-finance conference hosted by the Boston Federal Reserve Bank and Boston University in Boston, Massachusetts November 30, 2012.

Credit: Reuters/Brian Snyder

ST. PAUL, Minnesota (Reuters) - With inflation running well below the level that the Federal Reserve sees as desirable, there is little cause for concern that super-easy monetary policy will lead to runaway price rises, a top Fed official said on Tuesday.

"Inflation remains weak, or very low by historical standards, by the goal of 2 percent per year, so there is no reason to be afraid of monetary stimulus," Narayana Kocherlakota, president of the Minneapolis Federal Reserve Bank, told the St. Paul Chamber of Commerce.

Kocherlakota acknowledged that many Americans are affected daily by rising prices when they shop for basic goods while often coping with stagnant wages, but said policy makers must take a wider view.

"Your eyes go to things that are expensive and maybe your wages haven't been going up very much recently so even a relatively low rate of price increases that I have described sounds like a lot," he said in response to a question from the audience.

"But it is really important for us to be able to talk sensibly that inflation is not just under control, that it's low relative to where we want it to be and that gives more room for monetary policy stimulus to be helpful."

(Reporting by David Bailey in St Paul, Minnesota; Writing by Ann Saphir; Editing by Leslie Adler)

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