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Some Federal Reserve officials don’t see need for low interest rates

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Three Federal Reserve officials are starting to speak out about why they disagree with Chairman Ben Bernanke on the central bank’s latest policy move, CNNMoney.com reported.

The Federal Reserve decided last Tuesday to leave interest rates exceptionally low until at least 2013 – a dramatic move because the Fed doesn’t typically give hints on monetary policy that far in advance. The decision was interpreted by analysts as a sign that the Fed believes weakness in the economy will persist for at least two more years.

Three regional Fed presidents, Richard Fisher of Dallas, Narayana Kocherlakota of Minneapolis and Charles Plosser of Philadelphia, formally voted against the decision, marking the first time since 1992 that a Fed policy has drawn that much internal disagreement. Now those three are making their opinions publicly known.

In a speech today, Fisher said he didn’t think it was a wise move, and Plosser said in an interview with Bloomberg Radio that he felt it was “inappropriate.” Last week, Kocherlakota said he saw no need for additional accommodative policy beyond what the Fed had already enacted in November of last year.

The Fed has kept interest rates low since 2008. Low rates are thought to spur the economy by making it cheaper to borrow money, but Fisher argues that banks and businesses are already sitting on an abundance of cash and don’t necessarily want to borrow more money.