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Fed’s Kocherlakota Says ‘Desirable’ to Lift Main Rate in 2011

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said it would be “desirable” to lift the target for the benchmark U.S. interest rate by a “modest amount” this year, based on his inflation forecast.

The Federal Open Market Committee “should raise the fed funds rate by around 50 basis points” if core inflation rises by 1.5 percent this year, he said today in remarks prepared for a speech in Santa Barbara, California. “Under my baseline forecast, it would be desirable for the FOMC to raise the fed funds target interest rate by a modest amount toward the end of 2011,” said Kocherlakota, who votes on monetary policy.