Financial Times FT.com

Fed looks to supply for pointer on rates

By Krishna Guha in Washington

Published: May 19 2009 23:30 | Last updated: May 20 2009 00:38

The Federal Reserve is turning its attention to the impact of the economic crisis on the productive capacity of the US economy – an issue central to any assessment of when it might start tightening monetary policy again.

Most officials think the crisis will have some impact on supply because of structural changes that make it difficult to reallocate workers to different sectors of the economy and restricted financing for new business projects.

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