During two days of testimony on Capitol Hill, Federal Reserve Chair Janet Yellen has revealed the Federal Open Market Committee (FOMC)’s growing internal debate on wages and inflation. Wage and price growth continue to be “stop and go,” despite widespread reports of tight labor market conditions across the country. No one knows for sure why wages and inflation appear to have taken a breather. The interesting issue is that the trend is global in scope, affecting Germany and Japan as well.
Yellen has been careful to point out the FOMC’s uncertainty about whether the recent deceleration in inflation is due to transitory or more persistent shifts.