The Fed Is Right to Worry About “Kitchen Table Economics”

TIME

Anyone who was worried—based on Fed chair Janet Yellen’s recent comments about interest rates rising as early as 2015—that she was turning hawkish should be reassured by a speech she gave today in Chicago. Her comments focused on what the Fed should still be doing at this point in the recovery to promote a stronger labor market. She made it very clear that she sees our lingering post-financial crisis unemployment problems as cyclical, rather than structural. In other words, there’s a lot of slack in the labor market, and there’s more the Fed can do to fix that. “The government has the tools to address cyclical unemployment,” Yellen said. “Monetary policy is one such tool.” That’s why the market shouldn’t take the Fed’s recent scale back of its asset buying program as evidence that it’s giving up—merely that it’s changing its focus.

What’s interesting is where Yellen seems to be…

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