Fed’s Kocherlakota: 2015 rate rise not appropriate

28-Aug (CNBC) — Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said Friday he does not believe the central bank should raise interest rates this year, and policymakers may have to consider further quantitative easing.

“Barring big changes in the data between now and September … I don’t see a near-term increase in interest rates as being appropriate, and by near term I mean really through the course of 2015,” he said in an interview on CNBC’s “Squawk Box.”

If the Fed raises interest rates given the current inflation outlook, market watchers will conclude the central bank doesn’t think it can hit 2 percent inflation, he said. As a result, the Fed’s credibility in terms of people’s beliefs about its long-term inflation goals would suffer, he added.

“You’re already seeing that in market data, so this is not some economic theory. This is actually reality,” he said.

It will take a few years to get back to the Fed’s inflation target, he said.

[source]