U.S. interest rates are currently much higher than in Europe and Japan, and with neither the European Central Bank nor the Bank of Japan planning any rate hikes this year, foreign capital seeking higher returns could
put a lid on rate rises here.
This data shouldn't change the Fed's interest -
rate strategy, as a rising labor force participation
rate will
put a
lid on inflation regardless of how it's done, but it should lower our confidence that the Fed can solve the problem of a bifurcated workforce, in which a large chunk of workers are getting left behind, simply through interest
rate policy.