Despite decreased unemployment, inflation has not risen to the projected 2% the Fed was planning on. The relationship between these two rates, known by economists as the Phillips curve, should be one that holds firm: central banks cannot reduce unemployment without increasing inflation along the way. One thought on the lack of firm correlation is “temporary economic gyrations” that are masking the true effect. The jury is out on all the inner-workings, but the Fed must keep its promises in order to maintain a level of credibility.
Inflation Lagging Behind Decreased Unemployment Rate
- Posted June 16
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Economist.com
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