The Fed’s Gamble on Surplus Labor (Larry Hatheway, Project-Syndicate)

In recent weeks, the US Federal Reserve has buoyed markets by adopting a more gradual approach to policy normalization. Fed Chair Janet Yellen’s most recent public remarks, in late March, were more dovish than anticipated. And, at its last meeting, the Fed suggested that it would pursue two, rather than four, quarter-point interest-rate hikes in 2016. In response, investors have sold the US dollar and bid up equity prices and US Treasuries, and commodities and emerging-market assets have surged.

https://www.project-syndicate.org/commentary/fed-gradualist-approach-labor-surplus-by-larry-hatheway-2016-04