The president of the Minneapolis Federal Reserve Bank said Thursday the Fed may need to increase short-term interest rates by year's end if underlying inflation rises as he anticipates.
In a interview, Narayana Kocherlakota said he expected "a big upward movement" in core inflation—inflation excluding volatile food and energy prices—from about 0.8% late last year to about 1.3% by year-end.
As a result, he said, it's "certainly possible" the Fed's target for short-term interest rates, now near zero, would be lifted by more than half a percentage point late this year.
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