26 Jun 2014
Fed's Lacker: Keeping rates low might counter long-term unemployment somewhat
FXStreet (Łódź) - Richmond Fed President Jeffrey Lacker, who spoke on Wednesday in Lynchburg, Virginia, suggested that the current US unemployment rate doesn't seem to imply any additional slack on the labor market, than usually associated with this joblessness level.
Labor market changes structural, not cyclical, the Fed policymaker said, adding that monetary policy couldn't be used to counterbalance structural labor change in the US. He expressed hope however that keeping rates low for an extended period of time could have some effect on long-term unemployment.
Finally, Lacker said that employers had been complaining recentlyabout the lack of qualified workers to hire, even though so many people are unemployed right now.
"There aren’t enough skilled workers willing to work for the low wages and/or we don’t feel like hiring and training anyone," Adam Button explains the last piece of information. "Ultimately that’s inflationary but that’s the debate at the Fed. Should wages be allowed to catch up before the hiking begins? Or can that process take place with rates at, say, 1.00%?"
Labor market changes structural, not cyclical, the Fed policymaker said, adding that monetary policy couldn't be used to counterbalance structural labor change in the US. He expressed hope however that keeping rates low for an extended period of time could have some effect on long-term unemployment.
Finally, Lacker said that employers had been complaining recentlyabout the lack of qualified workers to hire, even though so many people are unemployed right now.
"There aren’t enough skilled workers willing to work for the low wages and/or we don’t feel like hiring and training anyone," Adam Button explains the last piece of information. "Ultimately that’s inflationary but that’s the debate at the Fed. Should wages be allowed to catch up before the hiking begins? Or can that process take place with rates at, say, 1.00%?"