Kocherlakota Sees Fed Funds Rate Increase as First Step in Exit

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said he favors raising the federal funds rate as the first step in the Fed’s exit from record monetary easing.

Speaking with reporters in New York today, Kocherlakota said he isn’t wedded to his strategy and “could be persuaded” to first drop the Fed’s policy of reinvesting proceeds from maturing assets into Treasury bonds, provided the change had the same effect as raising the benchmark interest rate by half a percentage point.