Improving labor markets are bringing Federal Reserve officials closer to a time when they can get back to bread-and-butter central banking, where there’s a tighter connection between changes in economic data and movements in short-term interest rates.
The Federal Open Market Committee last month debated how much slack remains in labor markets, and came closer to an agreement on how to exit from the most aggressive stimulus in the Fed’s 100-year history, minutes from the July meeting showed.
Some participants “were increasingly uncomfortable” with the committee’s forward guidance on keeping its benchmark rate low for a “considerable time,” according to the minutes published today. “Many” participants said they might have to raise borrowing costs sooner than they had anticipated.
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