18 (Reuters) – The Federal Reserve is
risking its credibility by not acting aggressively enough to
bring inflation back up to its 2 percent target quickly, a top
U.S. central banker said on Tuesday.
“I think we are creating risks for ourselves on the
credibility front,” Minneapolis Federal Reserve President
Narayana Kocherlakota told reporters after a talk to the St.
Paul Rotary Club. “If inflation continues to be persistent below
2 percent, people’s beliefs that it will get back to 2 percent
will start to erode, so then their belief about what our target
is for inflation will start to slide downwards.”