Free exchange: The price of getting back to work

Posted: January 31, 2014 in economy
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The triumph of Vladimir Putin

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Free exchange


Inflation may help determine how fast labour markets recover from recession

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IT IS something of a mystery, and not as happy a one as it sounds. In both America and Britain, the unemployment rate has fallen far faster over the past year than the tepid recoveries in both countries seem to justify. The pace of the decline has already caused difficulties for Mark Carney, the newish governor of the Bank of England, and will soon do so for Janet Yellen, who on February 1st takes over as head of America’s Federal Reserve. Both central banks gave “forward guidance” about when they might consider raising interest rates tied to levels of unemployment that will now be reached much sooner than either expected. Understanding the surprisingly quick fall and responding to it appropriately may be the pivotal task of the two central bankers’ tenure.

On the face of things, …

via Economic Crisis


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