INSUBCONTINENT EXCLUSIVE:
to continue to gradually increase interest rates
firm promise of central banks to keep inflation in check, he said, was the reason why price increases have remained in check - and also why,
The possibly changed connection between inflation and unemployment has been central to economic debate since the 2007 crisis.
Several
now-departed Fed policymakers warned persistently, for example, that as the unemployment rate dropped and the Fed printed trillions of new
dollars, runaway inflation was just around the corner
least very weak.
Powell said policymakers take seriously the risk that the relationship could revive as unemployment gets lower, and that
precautionary interest rate increases were therefore justified
But his remarks argue that the economy has become immunised against the sort of runaway price increases that took hold in the 1960s, and
that all the Fed need do is keep its promise to react to risks that might allow inflationary psychology to take hold.
