NEW YORK (TheStreet) -- An interest rate hike may might not be in the best interest of the United State economy, at least in the short term, former Federal Reserve Bank of Minneapolis President and professor of economics at the University of Rochester Narayana Kocherlakota said Thursday on "Bloomberg Daybreak: Americas."
The election of Donald Trump is "going to be another reason to be very prudent about raising rates," he said. If Kocherlakota were still apart of the FOMC he would not be in favor of a rate hike in December.
Kocherlakota discussed what a Donald Trump presidency means for the Fed expressing both long and short-term views on a rate hike. Both outlooks are "quite different," BloombergTV's David Westin said when asking the professor to explain his views.
In the short term Kocherlakota believes that there will be a degree of uncertainty with the new administration regarding which policies will be prioritized.
"I think if they prioritize the new vision towards trade agreements, I think that's going to create a lot of uncertainty for the global economy," Kocherlakota said. "I think monetary policy makers are going to be very nervous about removing accommodation in the face of that kind of uncertainty."
Westin pointed out that the market seems to disagree with Kocherlakota in the short term, after a sharp selloff following the initial shock that Trump is to be the next President of the United States, markets have stabilized.
"I agree with that and we'll just have to wait and see," Kocherlakota responded.
Monetary policy makers don't go by the markets, he continued. They go by what is best for the economy and any uncertainty created by Trump's policies have to be taken into consideration.
"I think that the broader vision that President-Elect Trump offered in his acceptance speech of very massive infrastructure investment in the United States is definitely positive for the U.S. economy and positive as a result for the Federal Reserve," Kocherlakota said.
Moving on to Kocherlakota's view for the medium term, Westin questioned the professor about his view that Trump may make it easier for the Fed to raise rates, not necessarily in December but in the future.
"What happens if you end up doing a massive infrastructure expansion, that's going to put upward pressure on prices and employment," Kocherlakota said.