Senior Fed officials say the labor market needs more time to recover.

Senior Federal Reserve officials stressed on Monday that the job market was far from fully healed, stressing that the central bank will ...


Senior Federal Reserve officials stressed on Monday that the job market was far from fully healed, stressing that the central bank will have to see much more progress before it feels ready to raise interest rates.

“We still have a long way to go before we reach the Federal Reserve’s maximum employment target,” John C. Williamsthe president of the Federal Reserve Bank of New York said on Monday afternoon.

Senior Fed officials – including Mr. Williams, Lael Brainard and Jerome H. Powell, the Fed chairman – have given similar assessments of the outlook in recent days and weeks. They stressed that the economy is recovering quickly, restoring jobs and normal business activity, and that existing disruptions in supply chains and hiring problems will not last forever.

But they say the recovery is incomplete and it is worth being modest on the way forward, especially as the Delta variant demonstrates the ability of the coronavirus to disrupt progress.

“Delta stresses the importance of being attentive to the economic results and of not focusing too much on prospects which could be shaken by the evolution of the viral conditions”, declared Monday Mrs. Brainard, governor of the Fed.

These comments follow the Fed’s September meeting, where the central bank’s policy committee clearly signposted that officials could start scaling back their massive asset purchase program as early as November. They bought $ 120 billion in government and government guaranteed securities every month.

Speeches on Monday highlighted that as officials prepare to take that first step away from full-blown economic support, they are trying to separate the decision from the Fed’s path for its top rate. policy interest, which is set to zero.

Central bankers have said they want the economy to return to full employment and inflation to be on track to average 2% over time before raising rates from the floor.

This makes the debate over the potential of the labor market a central part of the Fed’s policy discussion.

Some regional Fed presidents, including James Bullard of the Federal Reserve Bank of St. Louis and Robert S. Kaplan of the Federal Reserve Bank of Dallas, have suggested the job market may be tighter than it looks. , citing data such as Jobs and retirements.

But Williams said Monday the job market still had substantial room for improvement. As the unemployment rate fell from its pandemic high, he said the Fed was considering more than that figure, which only tracks people who are actively looking for work. The Fed also wants the employment rate to rebound. He stressed that a high level of job vacancies is not a clear signal that the labor market has healed.

“Even though job postings are at an all time high, job postings are not jobs,” Williams said. “These vacancies will not be filled instantly.

Although Mr Williams said he had observed the impact of school reopens on the labor market, he said he did not think they would cause a huge increase in the number of people returning to work this this month or in October.

“It may take a little longer for the labor supply to fully return,” he said.

Ms Brainard rebuffed the idea that labor force participation – the share of adults who are working or looking for a job – might not return to its pre-pandemic level.

“The claim that labor market participation has fallen permanently due to a downturn is not new,” she said. A similar debate unfolded after the 2008 financial crisis, and labor market participation eventually rebounded, especially for people in their early working years.

Ms Brainard warned that Delta was slowing the progress of the job market. Last week, there were more than 2,000 school closures linked to the virus in nearly 470 school districts, she said, and “the possibility of further unpredictable disruptions could cause some parents to delay their plans. return to the labor market “.

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Newsrust - US Top News: Senior Fed officials say the labor market needs more time to recover.
Senior Fed officials say the labor market needs more time to recover.
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