Headlines from the Minneapolis Fed’s Kocherlakota:
- Fed has been forced to lower real interest rates
- Weak economic outlook suggests they should be lowered more
- Current unusually low real rates will likely bring inflated asset prices, volatile returns and merger activity
- Macroeconomic risks best addressed by financial regulation
- Expects credit market access to remain limited for 5-10 years
Kocherlakota has turned uber-dovish in the past few months and that continues but he isn’t screaming for more QE from the top of a mountain. On balance, the FOMC seems content to leave all the programs as they are until there is some clarity about the economy.
