LA CROSSE, WI, Sept 4 The U.S. Federal Reserve
should look to its own economic forecasts and decide to give the
economy more policy support, a top Fed official said on
Speaking two weeks ahead of the U.S. central bank's policy
meeting when it is mostly expected to reduce its accommodation,
Minneapolis Federal Reserve Bank President Narayana Kocherlakota
repeated his long-held stance that, instead, the Fed "should be
providing more stimulus to the economy, not less."
The Fed has been buying $85 billion in U.S. Treasuries and
mortgage-backed securities monthly since last September in an
effort to reduce long-term borrowing costs, and has promised to
continue the program until there is substantial improvement in
the U.S. labor market outlook.
It has also said it will keep interest rates near zero until
the unemployment rate falls at least to a threshold of 6.5
percent, from 7.4 percent in July, as long as inflation remains
near a 2-percent target.
Kocherlakota, an outspoken dove, noted that the Fed's
policy-setting Federal Open Market Committee (FOMC) forecasts
inflation to remain at or below 2 percent over the next few
years, and that unemployment will decline only gradually.
"These forecasts imply that the Committee is failing to
provide sufficient stimulus to the economy," he said in prepared
remarks at the University of Wisconsin.
The policymaker did not repeat - as he has in many previous
speeches in arguing for easier policies - that the Fed should
keep rates low until unemployment falls to 5.5 percent, and not
the current threshold of 6.5 percent. Though he gave no hint he
had backed down from that stance.