An additional problem for central banks: Employment is decorrelated from GDP

Central banks (we look at the Federal Reserve and the ECB) now want to reduce inflation, and to do so they accept to slow down growth. But then an additional problem appears: the slowdown in growth is not slowing employment growth, at least for the time being, and is not driving up unemployment. The slowdown in growth then has no effect on inflation. This makes restrictive monetary policies highly inefficient, at least for a while, and is probably caused by companies’ hiring difficulties: companies have unfilled, vacant jobs that they continue to fill even as the economy slows.