Clarida via WSJ:

The focus on productivity growth is important because if the capacity of workers to produce goods and services improves, Fed officials may not have to worry as much about an acceleration in inflation when other indicators suggest less slack across the economy. This, in turn, would mean they wouldn’t need to pick up the pace of rate increases to prevent the economy from overheating.

At the same time, higher productivity growth might also raise estimates of the so-called neutral interest rate, or the level that should prevail over the long run. That would mean officials would have to raise rates higher than otherwise to reach a level that neither spurs nor slows growth.

First paragraph good, second sounds like gibberish. Powell speaks tomorrow. Stay tuned.

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