As central bank governors, Federal Reserve officials, economists and reporters convene for the annual economic policy retreat in Jackson Hole, Wyo., this weekend, the question on everyone's mind is: Will the Fed raise interest rates come September?
The answer should clearly be "no." The preponderance of economic data indicates that the predictable costs of premature tightening — slower job and wage growth — far outweigh the risk of accelerating inflation.
Six years into a lackluster U.S. expansion, price growth for personal consumption expenditures — excluding food and energy — has averaged less than 1.5% annually in the recovery, well below the Fed's unofficial 2% inflation target.