The annual Federal Reserve Bank of Kansas City Economic Symposium in Jackson Hole, Wyoming opens with a key question confronting central bankers across the globe: how to boost economic growth on a sustainable basis that benefits a larger share of the population.
For President Trump, the solution is key for the candidate who built his campaign on economic promises that will "Make America Great Again."
Kansas City Federal Reserve Bank President Esther George, along with other members of the U.S. Federal Reserve, have spoken publicly about their concerns over wages failing to rise at a faster pace given the tight labor market.
Economic growth in the U.S. is averaging 2% a quarter since the Great Recession, but historical averages, according to the Fed, indicate the economy should be growing at a stronger pace around 4.1%.
George spoke to FOX Business correspondent Adam Shapiro about this issue as well as the possible impact from the Fed’s accommodative monetary policy launched during the financial crisis to avert a calamity.
She has been a proponent of shrinking the Federal Reserve's $4.5 trillion balance sheet sooner rather than later, warning last May, "moving too slowly carries the risk of pushing the unemployment rate below its sustainable rate and inviting recession..."
But George, along with other central bankers, are grappling with the timing of changes to the Fed’s accommodative policy trying to determine if the slow rise in wages may be signaling a need for Fed officials to pause its process of normalizing policy.
George has previously said she sees no need to pause normalization, which could include another increase in interest rates this Fall as well as the start of the Fed’s program to slowly liquidate its huge holdings of U.S. Treasury notes and mortgage backed securities.
On Friday, Fed Chair Yellen will share her thoughts in a speech focused on financial stability at the same symposium in Jackson Hole, Wyoming.