According to articles in both the Wall Street Journal and the Financial Times, the Fed may no longer view the non-accelerating inflation rate of unemployment (NAIRU) as a useful tool for guiding monetary policy. The problem seems to be that they don't know where it is and what it means. This is certainly good news for those of us who have been making this argument for some time. It was very decent of Bernanke and Co. to keep their doubts on the NAIRU doctrine quiet throughout the celebrations of Milton Friedman's life and work.
--Dean Baker
