“By moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and I think put supply and demand at least closer together than they are, and that that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that,”
Jerome Powell, chairman of the US Federal Reserve, May 4th, 2022
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220504.pdf
So minor correction on my part if we’re being very particular, and sometimes that’s important. ‘Get wages down’ could have different implications than ‘keep wages down’. Elsewhere, he mentions wage growth being a good thing, however it is (at the time of the press conference) growing much faster than their target inflation rate.
In the US, the fed’s stated strategy is to keep wages down. It does not have a lot of tools to deal with inflation, so it raises interest rates to inhibit growth until inflation is under control- the “soft landing.” Legislation is needed in order to handle this problem, because wages will quickly be absorbed by increasing prices unless we can capture corporate profits with progressive taxation. I imagine the situation is similar in Canada but I’m not well aware. Remember to vote.
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