US policy makers count on Phillips curve to lift inflation back to their goal
Atlanta — Janet Yellen said in December that her main unfinished business as chairwoman of the Federal Reserve was getting inflation back to the central bank’s 2% target. A return to her former home in the San Francisco Bay Area would solve that. Metropolitan areas in the western US, those with more than 1.5-million residents, posted 3.4% inflation over the past year. That includes 2.9% in San Francisco, 3.5% in Seattle and 3.6% in Los Angeles, the government reported on January 12. By contrast, larger metro areas in the northeast and midwest registered price gains of less than 2%, while in the south it was 2.1%. The Fed targets national inflation and puts less weight on regional disparities such as those in the West, where housing prices are surging and local job markets are booming, partly as a result of technology-industry riches. On the other hand, policy makers are counting on that relationship between unemployment and price pressures, known as the Phillips curve, to lift infla...
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