Comments from the Minneapolis Fed President:
- Sees inflation and employment over the next 2-3 years as ‘too low’ compared to Fed’s goals
- Worries about financial stability risks aren’t a good enough reason to reduce accommodation
- Gains from tightening policy are slight; losses are tangible and significant
Kocherlakotahas shifted to the extreme dovish side of the FOMC in the past 8 months so these comments are no surprise. If Bernanke says something similar on the weekend, look for USD weakness on Monday.
