Kocherlakota the latest firebrand to set Fed exit

By

Bloomberg

From left, Richard Fisher, Charles Plosser and Narayana Kocherlakota

WASHINGTON (MarketWatch) - The Federal Reserve will lose another firebrand in 2016 when Minneapolis Fed President Narayana Kocherlakota steps down, continuing a trend where the U.S. central bank is losing strong individual voices on monetary policy.

Kocherlakota joins Richard Fisher, the president of the Dallas Fed and Charles Plosser, the president of the Philadelphia Fed, who have already announced plans to step down from the Fed next year.

All three were outside the mainstream at the central bank and often dissented from the majority opinion. Fisher and Plosser were firmly on the hawkish end of the spectrum, while Kocherlakota famously, at least in Fed watching circles, changed his feathers from a hawk to a dove.

Fisher gave the most colorful Fed speeches, often referring to diverse interests like Winston Churchill and celebrities like Lindsay Lohan. Plosser meanwhile pressed his colleagues to set policy rules and limit their discretion to adjust policy.

Kocherlakota's moment in the sun came in the fall of 2012.

After pressing for a rate hike earlier in that year, Kocherlakota switched and said that the Fed could keep rates close to zero until the unemployment rate fell below 5.5%.

Afterwards, liberal blogger Paul Krugman called Kocherlakota 'a real intellectual hero.'

This year Kocherlakota pushed back against expectations of an early Fed rate hike, saying that inflation would not return to the central bank's 2% annual target until 2018.

Kocherlakota , a voting member of the Fed policy making committee this year, dissented in October when the Fed decided to end its third round of bond-buying, commonly known as QE3.

He was not scheduled to vote again until 2017.

Stuart Hoffman, chief economist at PNC Financial Services Group, said Kocherlakota's departure will have no impact on the Fed's rate policy.

'The balance of power still rests with [Janet Yellen] and her closest allies,' Hoffman said.

In a statement, Kocherlakota said he decided to leave as the 'state of crisis' in the U.S. economy has passed. He said he will not seek reappointment to a new term following the conclusion of his current term on Feb. 29, 2016.

Lokasi:

Share :