How Central Banks Are Watching the Labor Market Tightness

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jul 17, 2026 · 9m · transcript

Central banks monitor labor market tightness via the ratio of job vacancies to unemployed workers. This episode dives into the specifics: the JOLTS data, the Beveridge curve, and the recent flattening. As of mid-2026, the U.S. vacancy-to-unemployment ratio has fallen from its 2022 peak of 2-to-1 to about 1.2-to-1, but remains above pre-pandemic levels. Lucas and Luna discuss why the Fed focuses on this metric, how it influences wage growth and inflation, and what the current flattening of the Beveridge curve implies for a soft landing. They also touch on the Bank of England's similar…