2012.05.09 17:43:23 HEARD ON THE STREET: Weak Euro Arrives Too Late

By Mark Peters Of DOW JONES NEWSWIRES MINNEAPOLIS -(Dow Jones)- A U.S. central bank official said Wednesday the Federal Reserve doesn't need to take further steps to promote economic growth and should look to start tightening monetary policy in the next six to nine months. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said data continues to show the need for a less accommodative monetary policy as inflation remains near targeted levels and the unemployment rate declines. "It is an appropriate time to start to think about when to begin the process of reversing the level of accommodation," said Kocherlakota, during a question-and-answer session here after prepared remarks to a legal conference. He added: "Not today, but I would say in six to nine months down the road we should begin to be thinking about initiating our exit strategy." Federal Reserve officials have said they plan to keep short-term interest rates near zero until late 2014 to support economic growth. Still, the Fed in June plans to conclude a $400 billion program in which it is purchasing long-term Treasury securities and selling short-term securities, as part of an effort to drive down long-term rates. As for labor participation, Kocherlakota said the exit of workers from the labor force continues, and he sees less of those people likely returning. "I do see these changes as more persistent than some others might, and that shapes my view of what maximum employment is going to be," Kocherlakota said. Still, he cautioned that trying to forecast how many of workers who have left the workforce will return is challenging. Kocherlakota said banking conditions are improving in his district that includes much of the upper Midwest. However, he says businesses remain uneasy about accessing credit. He added more clarity from elected officials on how they plan to address the U.S. debt over the long term would help the economy. -By Mark Peters, Dow Jones Newswires; 201-253-8906; mark.peters@dowjones.com (END) Dow Jones Newswires May 09, 2012 11:44 ET (15:44 GMT)