Low Unemployment, Inflation Rates Worry Fed

Inflation has been low despite a stable labor market, as employers are fearful of raising prices and alienating consumers but are more willing to hire workers with limited experience or even criminal records.

But such developments pose a challenge for the Federal Reserve, since moderate price increases typically have a positive effect on the economy without crushing profits or making consumer products unaffordable.

But labor costs, which usually rise as unemployment rates fall and employers have to compete for workers, have been somewhat mitigated by companies relaxing their standards and mining less expensive sources of candidates.

The sluggish inflation and uneasy economy has left the Fed hesitant to lower interest rates, putting it at odds with President Trump, who favors cutting the rates.

James Bullard, president of Federal Reserve Bank of St. Louis, told The New York Times that the lower inflation rates are a sign the economy is “going in the wrong direction.”

Officials will meet this year to review and strategize ways to counteract future economic problems.

Compiled by Olivia Boyd, WI Intern

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