The Fed is Focusing on a Strong Labor Market
The Federal Reserve operates with a dual mandate to support employment levels and to keep inflation under control. These objectives can be in tension with each other, since fundamental economic theory proposes that one is often achieved at the expense of the other. For example, allowing higher inflation should theoretically result in lower unemployment.
Jerome Powell, the Chairman of the Fed, recently announced that monetary policy at this time will pursue a strong labor market and tolerate increased inflation. As this article points out, “the central bank is no longer planning to raise rates to cool off the economy simply because unemployment has dipped to low levels.”
Investors can take note of this policy shift by accounting for potentially higher future inflation rates in their portfolio allocation decisions.
Read more on this subject here
- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management
