BOSTON, June 5 The Federal Reserve is keeping
interest rates low so as to stimulate spending in an environment
where people are spending too little, and not because it is
secretly worried about the future, a top U.S. central bank
policymaker said on Wednesday.
"Its not like we have a magic eight ball telling us what
will happen," Minneapolis Fed President Narayana Kocherlakota
said at Boston College's Carroll School of Management in
response to a question about whether low rates signal Fed
worries about the future. "People shouldn't be looking at our
actions and thinking we have some secret source of information
about what is going to happen."
Kocherlakota said one side-effect of low rates is an
increase in merger activity, which one audience member suggested
could hurt jobs if acquisitive companies trim staff to
streamline costs. Kocherlakota said that low rates can be
expected to boost demand, offsetting the drag on employment that
mergers might otherwise have.
(Reporting by Richard Valdmanis; writing by Ann Saphir; Editing
by Chizu Nomiyama)