Richard Clarida is Vice Chair of the Board of Governors of the Federal Reserve System and is saying the following:
- Economy at or near inflation and employment goals.
- Any plan targeting average inflation would need to be a credible one.
- Policy review will take the 2% inflation target as a given.
- Weak ‘ Phillips curve’ connection between inflation, unemployment, means prices less responsive.
- Plausible that NAIRU is at or below the current unemployment rate.
- Fed framework review likely to produce ‘evolution, not a revolution’ in how fed conducts policy.
- Recent improvement in labour force participation rate may have provided additional source of workers while keeping inflation tame.
- Inflation is running close to our 2% objective.
Speaking with Q&A to follow.
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