Fed's Kocherlakota sees 2.3 percent inflation in 2013 By Ann Saphir EVANSTON, Illinois (Reuters) - U.S. inflation will be above the Federal Reserve's 2 percent target next year, Minneapolis Fed President Narayana Kocherlakota said on Saturday, suggesting he sees pressure building for the central bank to lift interest rates. "I'm expecting inflation to be 2 percent this year, and 2.3 percent next year," Kocherlakota told the Midwest Economics Association's annual meeting. The Fed has kept U.S. short-term borrowing costs near zero for more than three years, and its policy-setting panel has said it expects to need to keep them there through late 2014. Kocherlakota, a monetary policy hawk, has said he believes the Fed should act to raise rates well before then. But his view is in the minority at the Fed, where most see inflation at or below the target in coming years, based on projections issued in January. Fed Chairman Ben Bernanke earlier this week said the economy would need to grow more quickly to ensure continued progress in reducing the unemployment rate, which now stands at 8.3 percent. Although he did not suggest a further round of bond buying was imminent, stocks rose on that very hope. Kocherlakota's speech on Saturday suggested such hope is misplaced, even if the Fed goes forward with more easing. Further monetary stimulus is powerless to reduce joblessness much more on its own without simultaneous hiring subsidies or other non-monetary stimulus, Kocherlakota said. That's because monetary policy can help reverse job losses that come from shocks that force households to pull back on spending, but not from so-called labor demand shock in which firms pull back on hiring due to uncertainty or tight credit conditions, Kocherlakota added. Because it is labor demand shock that is currently crippling the economy, pushing borrowing costs lower would not boost jobs, he said. The speech was based on a paper he first presented on March 20. Reporting by Ann Saphir; Editing by Will Dunham