Minneapolis Fed chief sees slow recovery ahead

The president of the Federal Reserve Bank of Minneapolis expects to see high unemployment persist for several years.

At a luncheon Friday in Minneapolis, Narayana Kocherlakota predicted that the national unemployment rate will fall slowly to around 8 percent by the end of 2013. And the recovery itself will take yet longer.

"If you're thinking five years, I don't think you'll be disappointed," he said.

Kocherlakota said that's one of the reasons the Fed has had such easy-money policies -- to provide support for the jobs recovery. However, Kocherlakota said he thinks that stance should be slowly ended. And he has twice dissented from decisions by the policy-setting arm of the Fed because of his stance.

Kocherlakota said if the Fed ends up having to rapidly tighten credit to rein in high inflation, businesses will face higher borrowing costs, and they may shed workers as a result. Kocherlakota said that sequence of events happened in the 1980s.