August 20, 2014
- in Uncategorized by schooloftrade
Fed Meeting Minutes Overview | Labor Market Improving on Schedule
*(US) FED MEETING MINUTES OF THE JULY 29-30 FOMC MEETING:
Felt labor market
improvement had been faster than expected, conditions noticeably closer to
normal
improvement had been faster than expected, conditions noticeably closer to
normal
– Labor market conditions
improved in recent months according to participants’ reports on developments in
their Districts as well as a range of national indicators.
improved in recent months according to participants’ reports on developments in
their Districts as well as a range of national indicators.
The improvement was
reflected not only in a pickup in payroll employment gains and a noticeable
decline in the overall unemployment rate, but also in reductions in broader
measures of under-utilization such as long-duration joblessness and the number
of workers with part-time jobs who would prefer full-time employment.
reflected not only in a pickup in payroll employment gains and a noticeable
decline in the overall unemployment rate, but also in reductions in broader
measures of under-utilization such as long-duration joblessness and the number
of workers with part-time jobs who would prefer full-time employment.
The labor
force participation rate was stable, and a couple of participants pointed out
that the transition rate from long-duration unemployment to employment had
moved up. Moreover, some participants cited positive signs of increased hiring
and turnover in the labor market, including increases in job openings and
hiring plans, higher quit rates, and apparent improvements in matching workers
and jobs.
force participation rate was stable, and a couple of participants pointed out
that the transition rate from long-duration unemployment to employment had
moved up. Moreover, some participants cited positive signs of increased hiring
and turnover in the labor market, including increases in job openings and
hiring plans, higher quit rates, and apparent improvements in matching workers
and jobs.
Participants generally agreed that both the recent improvement in labor
market conditions and the cumulative progress over the past year had been
greater than anticipated and that labor market conditions had moved noticeably
closer to those viewed as normal in the longer run. Participants differed,
however, in their assessments of the remaining degree of labor market slack and
how to measure it.
market conditions and the cumulative progress over the past year had been
greater than anticipated and that labor market conditions had moved noticeably
closer to those viewed as normal in the longer run. Participants differed,
however, in their assessments of the remaining degree of labor market slack and
how to measure it.
– Most participants supported reducing or ending re-investment sometime after
the first increase in the target range for the federal funds rate. A few,
however, believed that ceasing reinvestment before liftoff was a better
approach because it would lead to an earlier reduction in the size of the
portfolio.
the first increase in the target range for the federal funds rate. A few,
however, believed that ceasing reinvestment before liftoff was a better
approach because it would lead to an earlier reduction in the size of the
portfolio.
Most participants continued to anticipate that the Committee would
not sell MBS, except perhaps to eliminate residual holdings. However, a couple
of participants preferred to sell MBS in order to unwind the effect of the
Federal Reserve’s holdings on mortgage rates relative to other interest rates
more rapidly than would occur as a result of repayments of principal alone.
Some others noted that, given the uncertainties attending the normalization
process and the outlook for the economy and financial markets, it could be
helpful to retain the option to sell some assets.
not sell MBS, except perhaps to eliminate residual holdings. However, a couple
of participants preferred to sell MBS in order to unwind the effect of the
Federal Reserve’s holdings on mortgage rates relative to other interest rates
more rapidly than would occur as a result of repayments of principal alone.
Some others noted that, given the uncertainties attending the normalization
process and the outlook for the economy and financial markets, it could be
helpful to retain the option to sell some assets.
– Economic activity rebounded in
the second quarter. Household spending
appeared to be rising moderately, and business fixed investment was advancing,
while the recovery in the housing sector remained slow. Fiscal policy was
restraining economic growth, al-though the extent of the restraint was
diminishing. The Committee expected that, with appropriate policy
accommodation, economic activity would expand at a moderate pace with labor
market indicators and inflation moving toward levels that the Committee judges
consistent with its dual mandate.–
the second quarter. Household spending
appeared to be rising moderately, and business fixed investment was advancing,
while the recovery in the housing sector remained slow. Fiscal policy was
restraining economic growth, al-though the extent of the restraint was
diminishing. The Committee expected that, with appropriate policy
accommodation, economic activity would expand at a moderate pace with labor
market indicators and inflation moving toward levels that the Committee judges
consistent with its dual mandate.–
– Members discussed their
assessments of progress–both realized and expected–toward the Committee’s
objectives of maximum employment and 2 percent inflation and considered enhancements to the statement
language that would more clearly communicate the Committee’s view on such
progress. Regarding the labor market, many members concluded that a range of
indicators of labor market conditions–including the unemployment rate as well
as a number of other measures of labor utilization–had improved more in recent
months than they anticipated earlier.
assessments of progress–both realized and expected–toward the Committee’s
objectives of maximum employment and 2 percent inflation and considered enhancements to the statement
language that would more clearly communicate the Committee’s view on such
progress. Regarding the labor market, many members concluded that a range of
indicators of labor market conditions–including the unemployment rate as well
as a number of other measures of labor utilization–had improved more in recent
months than they anticipated earlier.
They judged it appropriate to replace
the description of recent labor market conditions that mentioned solely the
unemployment rate with a description of their assessment of the remaining
underutilization of labor resources based on their evaluation of a range of
labor market indicators. In their discussion, some members expressed
reservations about describing the extent of underutilization in labor resources
more broadly. In particular, they worried that the degree of labor market slack
was difficult to characterize succinctly and that the statement language might
prove difficult to adjust as labor market conditions continued to improve.
Moreover, they were concerned that, despite the improvement in labor market
conditions, the new language might be misinterpreted as indicating increased
concern about underutilization of labor resources.
the description of recent labor market conditions that mentioned solely the
unemployment rate with a description of their assessment of the remaining
underutilization of labor resources based on their evaluation of a range of
labor market indicators. In their discussion, some members expressed
reservations about describing the extent of underutilization in labor resources
more broadly. In particular, they worried that the degree of labor market slack
was difficult to characterize succinctly and that the statement language might
prove difficult to adjust as labor market conditions continued to improve.
Moreover, they were concerned that, despite the improvement in labor market
conditions, the new language might be misinterpreted as indicating increased
concern about underutilization of labor resources.
At the conclusion of the
discussion, the Committee agreed to state that labor market conditions had
improved, with the unemployment rate declining further, while also stating that
a range of labor market indicators suggested that there remained significant
underutilization of labor resources. Many members noted, however, that the
characterization of labor market underutilization might have to change before
long, particularly if progress in the labor market continued to be faster than
anticipated. Regarding inflation, members agreed to update the language in the
statement to acknowledge that inflation had recently moved somewhat closer to
the Committee’s longer-run objective and to convey their judgment that the
likelihood of inflation running persistently below 2 percent had diminished
somewhat.
discussion, the Committee agreed to state that labor market conditions had
improved, with the unemployment rate declining further, while also stating that
a range of labor market indicators suggested that there remained significant
underutilization of labor resources. Many members noted, however, that the
characterization of labor market underutilization might have to change before
long, particularly if progress in the labor market continued to be faster than
anticipated. Regarding inflation, members agreed to update the language in the
statement to acknowledge that inflation had recently moved somewhat closer to
the Committee’s longer-run objective and to convey their judgment that the
likelihood of inflation running persistently below 2 percent had diminished
somewhat.
– Many participants continued to attribute the subdued rise in wages to
the remaining slack in the labor market; it was noted that the elevated
level of relatively low-paid part-time
workers was holding down overall wage increases. Several other participants
pointed to reports that wage pressures had increased in some regions and
occupations that were experiencing labor shortages or relatively low
unemployment. However, a couple of participants indicated that the pass-through
of labor costs has been more attenuated since the mid-1980s and that wage pressures might not be a reliable
leading indicator of higher inflation.
the remaining slack in the labor market; it was noted that the elevated
level of relatively low-paid part-time
workers was holding down overall wage increases. Several other participants
pointed to reports that wage pressures had increased in some regions and
occupations that were experiencing labor shortages or relatively low
unemployment. However, a couple of participants indicated that the pass-through
of labor costs has been more attenuated since the mid-1980s and that wage pressures might not be a reliable
leading indicator of higher inflation.
– One member, however, objected
to the guidance that it would likely be appropriate to maintain the current
range for the federal funds rate for a considerable time after the asset
purchase program ends because it was time dependent and did not recognize the
implications for monetary policy of the considerable progress that had been
made toward the Committee’s goals.– SourceTradeTheNews.com
to the guidance that it would likely be appropriate to maintain the current
range for the federal funds rate for a considerable time after the asset
purchase program ends because it was time dependent and did not recognize the
implications for monetary policy of the considerable progress that had been
made toward the Committee’s goals.– SourceTradeTheNews.com
