Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed has done the best it can to spur a recovery in the U.S. labor market, even with the unemployment rate persisting at 8.3 percent.
“The Federal Reserve is performing about as well as it can on both mandates,” Kocherlakota said today, referring to the Fed’s obligation to achieve full employment and price stability. “The level of ‘maximum employment’ achievable through monetary policy is less than the ‘full employment’ of labor resources,” he said in the summary of remarks in Evanston, Illinois.
The Minneapolis Fed chief, responding to audience questions, said the Fed’s purchase of bonds to stimulate economic growth hasn’t been “putting any inflationary pressure on the economy” now, and the central bank has “a number of ways to mitigate the risk” from its balance sheet.
Kocherlakota said he expects inflation of around 2 percent this year, in line with the Fed’s target, and the Federal Open Market Committee sees prices as “well contained.”
The Fed official, in prepared remarks, repeated the speech he gave in St. Louis on March 20.
Kocherlakota has said he doesn’t see the need for more Fed easing given the progress of the U.S. economic expansion. The FOMC this month kept policy unchanged, saying unemployment is still “elevated” even after recent improvements in the job market.
“In terms of employment, there are limits to what monetary policy can achieve on its own,” Kocherlakota said at the Midwest Economics Association’s annual meeting. He doesn’t vote on the policy-setting FOMC this year