Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

For a given level of resource utilization, you’re getting more cost pressures, and you’re getting more upward pressure on prices. So it’s not a matter of their absorbing all of it in their profit margins when they’ve got that increase in costs. You’re absolutely right. In our basic framework, we don’t think that actual year-to-year unit labor costs influence overall price setting. It is in some sense a trend unit labor cost measure, and that actually was incorporated in FRB/US through a moving average or a set of lags. So there is still some upward pressure on trend unit labor costs coming about through the slower productivity growth, some of which in essence would be perceived to be lower trend productivity.

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