August 28, 2014

Yellen talks labor market at Jackson Hole

Aug. 25, 2014 – Federal Reserve Board Chair Janet Yellen spoke Friday at the Federal Reserve Bank of Kansas City Economic Symposium in Jackson Hole, Wyo., and said that labor market conditions still have "significant" issues.
Yellen noted that the Federal Open Market Committee last month had said labor market conditions were improving faster than they had expected, but she said the committee members "judged that underutilization of labor resources still remains significant."
NAFCU Chief Economist and Director of Research Curt Long commented, "She remains unconvinced that labor market slack has diminished to the degree that some have suggested, and she gave no indication that present conditions warrant a rise in short-term interest rates in the immediate future."
Yellen also suggested recent upward movements in inflation could be due partly to transitory factors – bolstering her argument that rates should remain the same for the time being – saying, "Inferring the degree of resource utilization from real-time readings on inflation is further complicated by the familiar challenge of distinguishing transitory price changes from persistent price pressures. Indeed, the recent firming of inflation toward our 2 percent goal appears to reflect a combination of both factors."