Ex-Fed President Narayana Kocherlakota writes for Bloomberg
Fed will remain reluctant to raise until inflationary pressures are much stronger
At that point Fed will feel compelled to move at a faster pace than 4 times per year
Markets no longer have a framework to understand what the Fed plans to do with interest rates
Fed will be concerned about a number of downside risks, especially from overseas (Brexit, European banking system)
Fed recognises that they have limited firepower to offset any shocks that arise
Are keeping rates low to ensure that economy will be as healthy as possible if the risks materialise
Yellen can use August Jackson Hole speech to detail how they will guide policy over next 6 months
Speech would be more useful than providing yet another forecast path of rates, one that is almost sure to be wrong
He's got it spot on as far as the market not understanding the Fed's thinking on the path of rates.
Kocherlakota was the dove of doves at the Fed. He's still arguing that the Fed should cut rates. He left the president role at the Minneapolis Fed last year and is now a professor of economics at the University of Rochester, and Bloomberg columnist
Kocherlakota: Fed needs to get a grip on rate forecasts
