Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said damage to the labor market may persist even as the expansion continues, holding U.S. unemployment higher than the usual rate since World War II.
Central bankers must “contemplate the possibility that the erosion in labor market performance that we’ve seen in the United States over the past five years may be highly persistent, even under appropriate monetary policy,” Kocherlakota said today in the text of remarks given in Minneapolis. Accelerating inflation is “a signal that our country’s current labor market performance is much closer to ‘maximum employment’ than the post-World War II U.S. data alone would suggest.”
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