Fed needs collective vision on rates -Kocherlakota

ROCHESTER, Minn., April 8 Tue Apr 8, 2014 2:59pm EDT

ROCHESTER, Minn., April 8 (Reuters) - The Federal Reserve needs to formulate, and then communicate, a sharper collective vision on what conditions would lead it to raise interest rates from rock-bottom levels, a top Fed official said on Tuesday.

Without such a vision, "We face this instability, that two words in a press conference ... can end up moving financial markets," Narayana Kocherlakota, president of the Minneapolis Federal Reserve Bank, told reporters after a speech here.

The Fed last month said it would reduce its monthly bond purchases to $55 billion and would continue to trim the program in measured steps as long as the economy improves as it expects.

After the policy-setting meeting, Fed Chair Janet Yellen briefly roiled markets when she suggested the Fed may start raising rates around "six months" after the bond-buying program ends. (Reporting by Ann Saphir; Editing by Leslie Adler)

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