Fed inertia just means delayed rate rise

US Federal Reserve chairwoman Janet Yellen's keynote speech at the central bankers' Jackson Hole retreat last Friday might have seemed a dud, offering little direction to markets on when interest rates could rise. Yet, it was revealing in other ways. The speech seemed an admission that the all-powerful Fed does not yet know which way the labour market winds are blowing. This explains why the Fed has been reluctant to give markets a clearer idea to trade on.

The data is still mixed. Ms Yellen noted that it had been especially challenging to make an assessment on the extent of "slack", or spare capacity, in the labour market. Structural factors affecting the market, such as ageing and the hollowing out of mid-skilled jobs, are conflated with such cyclical factors as a business do…