“Federal Reserve Bank of Minneapolis President Narayana Kocherlakota trimmed his forecast for U.S. economic growth and raised his outlook for unemployment slightly while calling for a tightening of monetary policy this year.
Unemployment will be “close to 8.5 percent” at year’s end, Kocherlakota said in a speech in Rochester, Minnesota, an estimate contrasting with “between 8 percent and 8.5 percent” in a May 11 speech. Economic growth will be “around 3 percent,” compared with “between 3 percent and 3.5 percent.”
“Given the depth of the recession that we experienced, this rate of growth is disappointing,” Kocherlakota said.
Central bank officials are discussing how quickly to begin tightening policy after completing the purchase of $600 billion in U.S. Treasurys by the end of June. They are also considering a strategy for how to remove stimulus, with a majority favoring ending the policy of reinvesting proceeds from maturing securities first before raising interest rates or selling assets, minutes of their April 26-27 meeting showed last week.”
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