Inflation Worries Dominated the Federal Reserve’s Last Meeting

Mary Daly, the president of the Federal Reserve Bank of San Francisco, told Yahoo Finance this week that she would be open to supporting a quicker end to the bond-buying program if economic trends did not improve.

“If things continue to do what they’ve been doing, then I would completely support an accelerated pace of tapering,” Ms. Daly said.

Officials have tried to separate their path for slower bond buying from their plans for interest rates. But investors increasingly expect rate increases to start midway through 2022.

The Fed has said that it wants to achieve full employment before raising borrowing costs to cool the economy. Jerome H. Powell, the Fed chair, has said that he does not believe the labor market has met that test yet. More than four million jobs remain missing when compared with the number of people working before the pandemic.

Officials discussed why more workers were not returning to the labor force at the meeting, with several policymakers suggesting that “labor force participation would be structurally lower than in the past, and a few of these participants cited the high level of retirements recorded since the start of the pandemic.” Others continued to point to pandemic-related factors like child care constraints and concerns about the virus.

There have been some positive signs in recent weeks. Household spending in October rose 1.3 percent from September even as prices spiked, the Commerce Department said Wednesday. Data released by the Labor Department on Wednesday also found that initial jobless claims dropped to their lowest point since 1969, falling to 199,000 last week. But some economists cautioned that the weekly data was potentially overstated by seasonal factors, and claims could still increase in the coming weeks.

Article source: https://www.nytimes.com/2021/11/24/business/economy/fed-fomc-meeting-minutes-november-2021.html