During a press conference yesterday, Janet Yellen, Chair of the Federal Reserve, announced that the Fed would continue its planned incremental increase of the federal interest rate, despite weak inflation numbers below the Fed’s projections.
Yellen’s reasoning? With the tight labor market and continued growth, the conditions look ripe for inflation to hit the predicted 2% mark. The “tight economy” Yellen is referring to means that unemployment is down, and so are wages. In other words it’s hard for employers to find people with the skills they need, and it’s also hard to find the money pay those people.
What does this look like on the ground? AirTalk host Larry Mantle talks to David Wessel, senior fellow at the Brookings Institute.
David Wessel, senior fellow in Economic Studies at the Brookings Institute and director of the Hutchins Center on Fiscal and Monetary Policy