New estimates from a team of researchers, including two staff economists at the International Monetary Fund (IMF), showed on Wednesday that the US unemployment rate must reach 7.5%, double its current level, to reduce runaway inflation.
Key points
“It’s would mean job losses of perhaps 6 million peoplebut the research found that only under “fairly optimistic assumptions” about US labor market behavior and inflation could the US Federal Reserve tame current price pressures with a smaller hit to employment. “
“If the labor market doesn’t behave, or (inflation) expectations don’t behave, the small increase in unemployment that the Fed projects will not be enough. Either inflation will stay substantially higher, or we will have higher unemployment and a substantial economic slowdown..”
Source: Fx Street
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