Economy

Fed chair says relationship between inflation and unemployment is gone

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Federal Reserve Chairman Jerome Powell said the relationship between unemployment and inflation has collapsed.

“The relationship between the slack in the economy or unemployment and inflation was a strong one 50 years ago … and has gone away,” Powell said Thursday during his testimony before the Senate Banking Committee. He added the strong tie between unemployment and inflation was broken at least 20 years ago and the relationship “has become weaker and weaker and weaker.”

“In additional to that, we are learning that the neutral interest rate is lower than we had thought and … the natural rate of unemployment rate is lower than we thought. So monetary policy hasn’t been as…



Source cnbc.com

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