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Category: Money

Kocherlakota: Rates Could Go up in Late 2011

Written on April 02, 2011 by Japhet Writ

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After two years, Minneapolis Fed president - Narayana Kocherlakota - indicated that the central bank could raise the interest rates before the year ends.

Minneapolis President, , said in a Wall Street Journal interview last Thursday that the could raise by the end of 2011. Since 2008, the has kept interest rates to historic lows between 0% – 0.25%.

He expects the economy to grow about 3% this year. Narayana Kocherlakota also added that if the underlying continues, the Fed will end its QE2 bond purchasing program by June.

If core inflation increases by 50 basis points over the year, the native response would be to raise the target rate more than the observed inflation. That said, there will be an additional of more than 0.5% for short-term interest rates.

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