Yellen on Phillips Curve: it's still a framework she finds useful
Yellen on Phillips Curve: it's still a framework she finds useful, though the relationship between employment and wages has become more attenuated over time. She noted movements in oil prices and the dollar as having very substantial effects on overall U.S. inflation. It's not a mystery why inflation was so low over the prior couple of years, noting the slack in the economy and labor force after the financial crisis and with the drop in oil prices. But what is surprising is the softness in prices this year given the improved growth a depreciated dollar, and more stable oil prices. She still sees transitory, idiosyncratic factors are impacting, and still expects inflation will firm to 2% next year.