Yellen sees potential benefits in ‘tight’ labour market
It could help return inflation to target quicker and boost productivity
Janet Yellen outlined three "special" considerations underlying her support for a "gradualist approach" to raising interest rates last week – including the potential benefits of a tight labour market for the inflation outlook.
By allowing the unemployment rate to fall below its longer-run sustainable level – estimated to be just over 5% – the Federal Reserve could, Yellen said, return inflation back to 2% more promptly.
Moreover, a "tight labour market may also work to reverse some of the
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