Dudley, William C. on 2018 January 18 at 18:57
Historically the ability of the Fed to generate a soft landing when the unemployment rate has gone too low . . . the track record is poor.
Historically the ability of the Fed to generate a soft landing when the unemployment rate has gone too low . . . the track record is poor. Pretty much in all the cases where the unemployment rate has been pushed up a little, it has actually ended up rising a lot. There are no examples historically of the unemployment rate moving up a half a per cent, or 1 per cent, or even 1.5 per cent. Once you have pushed up beyond a couple of tenths of a per cent, the next stop historically is there has been a full-blown recession. Now that does not mean that historical regularity necessarily has to be repeated, but I do think it is hard for the Fed to bring the economy back to a sustainable growth pace, sustainable labor market, if the economy really is too strong and the unemployment rate gets too low. That is a risk to the longer-term outlook but it needs to be recognised. Dudley, William C.