(Reuters) -Resolving “tension” between high inflation and still-elevated unemployment is the most urgent issue facing the Federal Reserve right now, Fed Chair Jerome Powell said Wednesday, acknowledging the central bank’s two goals are in potential conflict. The United States is more than 5 million jobs short of where it was before the pandemic. At the Fed’s most recent meeting policymakers lifted their inflation forecasts for this year to 4.2% – more than twice the targeted level of 2%. Typically the rates of unemployment and inflation are inversely related, partly due to monetary policy and the use of interest rates to either stimulate or depress the demand for goods and services, thus influencing prices and hiring. The issue now is how long that dislocation lasts, and whether inflation proves so persistent that it outruns improvement in the job market and forces the Fed to begin raising interest rates while unemployment is still high.

Source: MetroXpress September 29, 2021 18:45 UTC