The U.S. Federal Reserve hinted on Wednesday that a surprisingly strong jobs market recovery could lead it to raise interest rates earlier than it had been anticipating.
At the same time, most Fed officials wanted further evidence before changing their view on when rates should rise, according to the minutes from the central bank’s July 29-30 meeting. “Labor market conditions had moved noticeably closer to those viewed as normal in the longer run,” the minutes said, adding that policymakers “generally agreed” the job market was healing faster than they had expected.
The Fed had said in its policy statement following the July meeting that there was “significant” labor market slack, but the minutes showed many members of its policy-setting panel thought this characterization “might have to change before long.” “The committee as a whole has started to shift its stance,” said Paul Dales, an economist at Capital Economics in London. “The Fed has moved closer towards raising interest rates.”