Tuesday, May 3, 2011

Attention Fed: Headline Inflation Matters

This is the conclusion of Hellen Mees at VoxEU.org:
Even if the current spike in headline inflation proves to be transitory, past experience suggests that it may well lead to a permanent increase in real hourly wages. Unless monetary policymakers in the US favour feverish boom-and-bust cycles with prolonged periods of high unemployment, they had better start paying close attention to headline inflation, like their counterparts at the ECB do.

No comments: