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Fed's Kocherlakota: FOMC dissenting vote due to lack of action in response to subdued inflation outlook
Minneapolis Fed President Narayana Kocherlakota released a statement on Friday in which he explained that the reason for his dissenting vote at the monetary policy meeting on Wednesday was the inability of the FOMC to respond to the deteriorating inflation outlook.
"Market-based measures of longer-term inflation expectations have fallen recently to unusually low levels, a decline that I believe reflects that kind of increased downside risk," he pointed out.
Kocherlakota stressed that bringing inflation towards the central bank's 2 % target was currently of utmost importance and that terminating QE would hamper reaching the goal. In his opinion, the Fed could also have pledged to maintain interest rates close to zero "at least until the one- to two-year-ahead inflation outlook has risen back to 2 percent, as long as risks to financial stability remain well-contained."