WASHINGTON (Reuters) – Since adopting a new approach to U.S. monetary policy weighted towards ensuring a strong labor market, Federal Reserve officials have been reluctant to define key terms like “maximum employment,” arguing they did not want to prejudge how many jobs the economy could produce but feel their way toward that end.
They are hesitant no longer.
In two detailed paragraphs in the minutes of their Dec. 14-15 policy meeting, U.S. central bank officials declared the process all but complete. Over the course of 344 words, they ticked off a range of reasons for why the job market is “very tight” already and poised for “rapid progress” in covering any distance left to their maximum employment goal.
That would clear the way for the Fed to hike interest rates after pledging not to do so until maximum employment was assured.
But in the context of the discussion underway since the start of the coronavirus pandemic, when more than 22 million jobs disappeared in a collapse that fell heaviest on lower-income workers and racial and ethnic minorities, the minutes also showed the limits of how far the Fed is willing to go in ensuring the jobs recovery is “broad and inclusive” as well as complete.
Wages are rising, unemployment rates are falling across demographic groups, and the difficulties that remain in the job market, Fed officials said, had less to do with monetary policy and more to do with ongoing disruptions from COVID-19 – factors like school reopenings, child care and…
