Everyone is debating how long the Fed will continue to hold rates down. Pantheon Macro's Ian Shepherdson is out with a chart showing that for the past 25 years, it's actually been quite simple to predict when the central bank is likely to do so: wage growth acceleration. He explains why: From the Fed’s perspective, the logic is simple enough. In a cost-push inflation model with a 2% target, unit labor costs need to be contained in the medium-term to 2% growth. Allowing for productivity growt...
For 25 Years, There Has Been A Nearly Sure-Fire Way To Predict How The Fed Will Act
Business Insider - 29 Jun 2014 23:47
Everyone is debating how long the Fed will continue to hold rates down. Pantheon Macro's Ian Shepherdson is out with a chart showing that for the past 25 years, it's actually been quite simple to predict when the central bank is likely to do so: wage growth acceleration. He explains why: From the Fed’s perspective, the logic is simple enough. In a cost-push inflation model with a 2% target, unit labor costs need to be contained in the medium-term to 2% growth. Allowing for productivity growt...
Share this Article
Recommended