The Federal Reserve's ultra accomodative policies will inevitability result in financial market instability for years, but such risks are necessary to boost inflation, said Federal Reserve Bank of Minneapolis president Narayana Kocherlakota.

"For many years to come," he said, the Fed's policy-setting committee "will only be able to achieve its congressionally mandated objectives by following policies that result in signs of financial market instability," Kocherlakota said.