Despite fall in joblessness, US inflation may not rise

Low labour force participation and the "new normal" of available supply of cheap energy and labour globally may force the US Fed to reverse course on rate hikes


FOR several months, they have been predicting that inflation was around the corner. After all, the Great Recession was over and the recovery of the American economy was accelerating slowly but surely.

Indeed, reflecting the growth in the economy, the unemployment rate has been falling steadily, and as every student of economics knows, that was going to put upward pressure on wages which in turn would trigger a rise in prices, creating the inevitable inflationary pressures.

Hence as Federal Reserve Chair Janet Yellen and her colleagues on the Federal Open Market Committee (FOMC) have made clear this year, after bringing to an end its loose monetary policy, the US central bank was ready...

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to