Binyamin Apllebaum does a nice job summarizing Friday’s conference here: http://www.nytimes.com/2016/10/15/business/economy/federal-reserve-janet-yellen.html?ref=business&_r=0
Here are the takeaways:
“In a wide-ranging speech, Ms. Yellen said the Fed was struggling to understand the behavior of the labor market and the weakness of inflation. It is reconsidering how changes in monetary policy ripple through the economy, and the impact of international events. In short, as often happens after a crisis, the Fed is sorting through some existential issues.”
“The conventional understanding of monetary policy is that the Fed raises or lowers interest rates, which moves markets, which changes the behavior of businesses and consumers, and so the American economy grows or slows. But the Fed has struggled to stimulate the economy.”
“The behavior of inflation is another mystery. It fell less than expected during the recession; it has strengthened more slowly than expected in the aftermath. “The influence of labor market conditions on inflation in recent years seems to be weaker than had been commonly thought,” she said.
Finally, she mentioned the impact of global economic weakness on domestic growth.”
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