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This economic slack is pushing inflation worryingly low.
By creating economic slack, this should stop inflation rising further.
Granted, more economic slack ought to reduce inflation.
But its statement Wednesday omitted any reference to economic slack.
It contains information about the sustainability of output and the degree of economic slack.
There is every chance inflation will pick up as economic slack is eroded".
Given America's greater economic slack and hence the risk of deflation, that is understandable.Alpine reflectionsWhy has this situation arisen?
Moreover, there is little or no economic slack: euro-area output is probably close to its maximum potential already.
"Economic slack persists and inflation is running below the Fed goal in its medium-term projection," Mr. Reinhart wrote.
But most rich-world economies have ample economic slack, and in several countries fiscal tightening will tug at recovery.
Ms. Yellen believes that "economic slack and downward pressure on wages and prices are pushing inflation down".
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