Projections will include the expected pace of economic growth, the anticipated unemployment rate and any notions of inflation.
The new-economy crowd insists this is nonsense: inflation is dead, and the concept of a natural rate of unemployment outdated.
Theory and practice both tell us that printing money cannot generate economic growth or lower the natural rate of unemployment, but it can cause inflation.
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But when an economy experiences a significant increase in the rate of inflation, it nearly always ends up with an unemployment rate that goes along for the ride.
And the Fed may have concluded that American inflation is less sensitive than it was to changes in the rate of unemployment.
In the case of Brazil, firms appear to be confusing rising demand with rising inflation and, in the face of a record low unemployment rate, and a limited amount of qualified labor, hoard and overpay workers despite falling output.
On the x-axis is the rate of unemployment, on the y the rate of inflation.
The Congressional Budget Office estimates that the rate of unemployment below which wage pressure will tend to increase inflation is 5.8%.
Slowing cost growth would lower the unemployment rate consistent with steady inflation by approximately one-quarter of a percentage point for a number of years.
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Mr Wyplosz concludes that low rates of inflation carry a significant unemployment cost, and that the optimal rate may be higher in Europe than it is in America.
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The Fed may not be able to find a solution quickly due to a division among participants over the natural rate of unemployment and how flexible the FOMC should be with its inflation target, Nomura said.
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Once workers try to catch up, the old relationship will re-emerge and the unemployment rate consistent with stable inflation will rise back to its previous level of above 5%, from a low of 3.9% last year.
The impact on the Social Security system of a 1% rise in unemployment is far greater than that of a 1% increase in the inflation rate.
"This inflation news would open the door for Fed action if the unemployment rate is drifting higher in the first half of the year, " said Mr. Kasman.
All they would have to do is look at the most salient periods of inflation that occurred over the last 40 years and see how negatively it affected the unemployment rate.
Rather than promising to print money until the economy starts to recover, a rather vague concept, the Fed is now promising to ease until one of two things happens: the unemployment rate falls below 6.5 percent or the inflation rate rises above 2.5 percent.
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Two years into his mandate, Mr. Mitterrand's radical program of nationalizations and bold economic stimulus to cut the country's unemployment rate led to quicker inflation.
Importantly, he spoke of the transition to a new forward-rate guidance, possibly tied to economic indicators such as inflation and unemployment.
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