The Federal Reserve should not raise interest rates until the second half of 2016 to allow the labor market to continue to strengthen, said Narayana Kocherlakota, the president of Minneapolis district branch of the U.S. central bank, on Tuesday. "In light of the outlook for unduly low employment and unduly low inflation, the [Fed] can be both late and slow in reducing the level of monetary accommodation," Kocherlakota said in a speech to the Chamber of Commerce in Bismarck, N.D. The Minneapolis Fed president said that while labor market conditions improved more in 2014 than they had in almost 20 years, the U.S. would need three more years of similar improvements for the job market to return to its pre-Great Recession levels. Kocherlakota, a leading dove on the central bank who is not a voting member this year and is retiring in 2016, said he did not see inflation rising sustainably above the Fed's 2% target until 2018 and added he did not see any material threat to financial stability that required any Fed rate hikes.
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