May 10, 2012 / 6:50 PM / in 6 years

Rising US inflation means Fed should act-Kocherlakota

MINNEAPOLIS, May 10 (Reuters) - Minneapolis Fed President Narayana Kocherlakota on Thursday forecast rising inflation and said the Federal Reserve should begin to prepare the ground for an exit from its super-easy monetary policy in the coming months.

Kocherlakota said he sees inflation at about 2 percent this year - the Fed’s target - but rising to 2.3 percent next year. Given that rise, he said the Fed’s policy-setting committee may soon need to change its current statement projecting it will need to keep rates low through late 2014.

“If the committee were to agree with my prognosis that we should be initiating exit in six to nine months, you would want to change language of that statement even sooner,” he told reporters after a speech at the Economic Club.

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