Kocherlakota Says New Fed Guidance Fosters Policy Uncertainty

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, who dissented from this week’s decision on monetary policy, said the central bank’s new guidance about its policy intentions risks holding back economic growth by fostering uncertainty.

The Federal Open Market Committee’s omission of quantitative benchmarks to guide changes in interest rates creates “uncertainty about the extent to which the Committee is willing to use monetary stimulus to foster faster growth,” Kocherlakota said in a statement released today. “This uncertainty is a drag on economic activity.”