MINNEAPOLIS Jan 15 The U.S. central bank should
keep interest rates low until the jobless rate is a more
"normal" 5.5 percent, a top Federal Reserve official said on
Tuesday, in one of the strongest calls yet from a Fed
policymaker for more monetary easing.
"I do think that it's important for the public to know that
the Fed is going to stay in an accommodative stance until the
economy is much closer to being what one might consider normal,"
Minneapolis Federal Reserve Bank President Narayana
Kocherlakota told reporters. "And I think 6.5 percent
unemployment, I think that would still be too high to be
Kocherlakota earlier in the day called for the Fed to extend
its pledge to keep rates low until the unemployment rate drops
to 6.5 percent, arguing that using a 5.5 percent threshold would
put the economy back on track more quickly. Critics have said
that keepings rates low for so long could spark unwanted
inflation, but Kocherlakota disagreed.
"It doesn't set you up for overheating" because wage
pressures are so low, he said.