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Fed's long, strange inflation trip feels like a 1960s flashback

The unemployment rate fell from 7% in early 1961 to 4% by end of 1965

Jeanna Smialek 

Joblessness in the US has fallen to its lowest level in more than a decade, yet wages and inflation have been slow to respond. It’s a puzzle for the Federal Reserve, and history may prove a relevant guide. The Fed grappled with a similar situation in the 1960s, Deutsche Bank economists point out in a new research note. The unemployment rate fell from 7 per cent in early 1961 to 4 per cent by the end of 1965, yet core inflation was stuck in low gear — much like today. Back in the ‘60s, a confluence of fiscal and monetary policy factors caused prices to take off around the ...

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First Published: Sat, June 24 2017. 20:48 IST
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