Kocherlakota Says Fed Aims for `Balanced' Policy Approach

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the central bank takes a balanced approach in addressing its dual mandate to ensure price stability and maximize employment.

Kocherlakota, speaking today in a panel discussion at the Boston Fed, reiterated a January 2012 policy statement in which the Federal Open Market Committee said its inflation and employment “objectives are generally complementary.”

“However, under circumstances in which the committee judges that the objectives are not complementary, it follows a balanced approach in promoting them,” Kocherlakota said, according to slides he prepared for the panel, quoting from the FOMC statement of principles.

The FOMC in March reiterated its plan to buy $85 billion in bonds every month until the labor market outlook improves “substantially.” It also pledged to keep interest rates near zero as long as unemployment is above 6.5 percent and inflation doesn’t exceed 2.5 percent.

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