Fed hawks

Senaste i raden av “outspoken” Fed hawks Kocherlakota, menar på att Fed kan behöva höja räntan med “¾-percentage-point increase in rates.” Det verkar bli alltmer spänt läge mellan de som vill höja respektive inte höja räntan. Precis som Taylor själv hävdade för ca en månad sedan, så behöver räntan höjas enligt “the Taylor rule”.

“Narayana Kocherlakota, in an interview with Dow Jones Newswires and The Wall Street Journal, said that if the U.S. economy grows at about 3% this year, as he expects, and underlying inflation ticks higher, as he expects, then the Fed will end its $600 billion bond-buying program as planned in June.

He expects core inflation (inflation excluding volatile food and energy prices) will rise from about 0.8% late last year, when the Fed launched its bond-buying to about 1.3% by year end, he said. As a result, lifting the Fed’s target for short-term interest rates by more than half a percentage point late this year is “certainly possible.” He noted that the often-cited Taylor Rule, named for the Stanford University professor who devised it, would in that circumstance call for a ¾-percentage-point increase in rates.” (MarketWatch)

http://www.marketwatch.com/story/fed-official-sees-higher-rates-by-year-end-2011-03-31