Yellen Sees Muted Inflation as Unemployment Curbs Wages

By Jeff Kearns Apr 17, 2014 12:00 AM ET

Janet Yellen is eyeballing wages for signs of inflationary pressure. She doesn’t see any so far.

“Wage gains continue to proceed at a historically slow pace in this recovery, with few signs of a broad-based acceleration,” the Federal Reserve chair said yesterday in her her first major monetary-policy framework speech.

Yellen said in response to a question from Harvard University economist Martin Feldstein that she expects people who have been out of work for a long time to return to the labor force as job prospects brighten. That will keep a lid on wages and inflation.

“The long-term unemployed are likely to move back more actively into the labor force and into the job market and exert pressure on wages and prices,” she told the Economic Club of New York. “Clearly, we will have to watch unfolding evidence and evaluate it with an open mind.”

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http://www.bloomberg.com/news/2014-04-16/yellen-sees-muted-inflation-as-unemployed-keep-wage-pressure-low.html