Draghi vs. Yellen: Who Wins 2015?

John Blank
August 22, 2014


As anticipated, Janet Yellen spoke this morning in Jackson Hole.  She was a noted academic labor economist.  It is no surprise the conference was labelled "Labor Market Dynamics" this year.

In her speech, she said the labor market is getting closer to Fed objectives, and the timing of the impending rate hike will be gauged relative to labor market slack.  The Fed is tracking a number of labor market variables to do this assessment.

Ms. Yellen says it is difficult to gauge the slack.  The labor market has visibly changed after the 2008 crisis. Some of the change the Fed sees may be structural (That's more or less permanent change). Some may be cyclical (That means temporary). Want an example of what's difficult to understand?  Explaining the rise in part-time workers over the last few years.  She also said there is scope for wages to rise, and there is no recipe for monetary policy. 

Publication of the Jackson Hole speech's text left both stock and bond markets flat.

My RTI Question:  Does a Yellen Rate Hike Lead Next Year?  Or Does Draghi Keep Rates Down?

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