Fed's Kocherlakota says 2011 hikes 'possible' (by Steve Goldstein)

WASHINGTON (MarketWatch) -- Narayana Kocherlakota, the president of the Minneapolis Fed and a voting member of the Federal Open Market Committee, told The Wall Street Journal that rate hikes by a half point later this year are "certainly possible." "If you consider monetary policy was appropriate at the end of 2010...and then you see core inflation go up by 50 basis points over the course of 2011..the usual response that we know from 20 years of thinking about monetary policy (or even more) is to raise the target rate by even more than that increase in observed inflation," Kocherlakota was quoted as saying. "So that means you should be raising the target rate by more than 50 basis points." The regional Fed presidents have made noises over the last two weeks about ending the central bank's unprecedented low interest rates as well as the $600 billion bond buying plan.