Head of Minneapolis Fed weighs in on Bernanke replacement

The president of the Federal Reserve Bank of Minneapolis says the next head of the Federal Reserve should be someone committed to the the Fed’s current economic stimulus programs.

Narayana Kocherlakota made his remarks Friday at a Twin Cities gathering of bankers.

The head of the Central Bank, Ben Bernanke, concludes his term at the end of January. Kocherlakota says he has no inside knowledge about who will replace Bernanke. He says the person will have to defend the Fed’s economic stimulus, given a persistently high national unemployment rate.

“The real test for us is going to be about being able to keep a high level of accommodation in place even as there’s a lot of onlookers and observers calling for us to back off,” he said. “The leadership being provided by the chairperson in that regard will be critical I think.”

Kocherlakota also expressed concern that a lack of agreement to extend the nation’s debt ceiling could roil financial markets.

“If we actually hit the debt ceiling and start to have to cut back on what the government is paying out because of that, I think that would raise big uncertainties in markets. I don’t want to exaggerate the risks but on the other hand we’ve learned over the course of the past five years or so, you want to stay away from exciting those kinds of uncertainties in financial markets.”