The slow rise in consumer prices shows the U.S. economy is not growing as quickly as it could, said Minneapolis Federal Reserve Bank President Narayana Kocherlakota.
The inflation rate is running near zero thanks to cheap fuel, he said. Without factoring in gasoline and food, prices are only growing at about 1.2 percent a year. Kocherlakota said he thinks the Federal Reserve should keep a benchmark interest rate near zero until inflation rises to the target level of 2 percent.
Kocherlakota said low inflation translates to slow growth in wages and jobs. "We have more work to do," he said on MPR News with Tom Weber. "If you look at the numbers over the past seven or eight years, we have a lot of room for improvement in how we're doing in getting employment back up."
The U.S. unemployment rate fell slightly to 5.4 percent in April. Minnesota's was 3.7 percent.
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