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Fed’s Williams Says It’s ‘Good’ Economy Can Have Strong Job Market Without Inflation

New York Fed leader John Williams said Monday the central bank’s views on how low the unemployment rate can go without sparking inflation have evolved.

The fact the economy can operate with historically low unemployment levels without sparking inflation is “good,” Mr. Williams said at the end of a “Fed Listens” event held at his bank. The gathering was part of a series of events the central bank has been holding to solicit community views on central bank policy.

Mr. Williams didn’t comment on the interest rate outlook. The current jobless rate is at 3.6% — the lowest since the Vietnam War and well under the level that should spark higher inflation, at least based on traditional economic view points. Mr. Williams said “we’ve changed our view on how low the unemployment rate can go” without driving up price pressures.

Inflation remains well under the Fed’s 2% goal despite the strong job market. Fed officials have backed away from rate rises in large part because of the weakness of the jobless rate.
Source: Dow Jones

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