FX.co ★ Kocherlakota speaks on the US economy. Review for September 7, 2011 (EUR/USD)

Indicators of last inflation pressure wave and forecasted futures pressure in August appeared to be higher than during the last largest rate shift in November, said president of the Federal Reserve Bank of Minneapolis Narayana Kocherlakota. Proceeding from the rules regulating the information supply for shaping monetary policy, there is no need in a milder policy. Moreover, these rules suggest lowering the level of policy easing.

Kocherlakota also noted that despite all economic growth indicators have proved to be quite “anemic”, the FRS should carefully monitor the data on labour market and inflation. He also emphasized that in comparison with November 2010, when the FRS launched the programme of obligations purchase known as the second round of quantitative easing the unemployment shrank considerably. Most part of this fall is due to many people having got depressed and abandoned the idea of finding a job. In Kocherlakota’s opinion, such unfolding of the situation can well be regarded as better conditions of the labour market.

As to the economic growth, Kocherlakota expects that the real GDP growth is likely to constitute 2.5% y/y this year and next one. It is a slight decline as compared to previous forecasts. He believes that the unemployment rate (now 9.1%) will be below 8.5% level by the end of the following year.