The US Federal Reserve has been surprised by how quickly the country’s labour market is healing but does not want to bring forward a planned rate hike until the recovery looks more convincing, according to minutes of its last policy meeting.
"Labour market conditions had moved noticeably closer to those viewed as normal in the longer run," according to the minutes of the central bank's 29-30 July meeting, which were released today.
Policymakers "generally agreed" that improvements in the labour market over the last year had been "greater than expected," according to the minutes.
The Fed had said in its policy statement following the meetings that there was "significant" slack in the labour market, but the minutes showed many members of the Fed's policy-setting committee thought this characterisation "might have to change before long."
They also showed officials had largely agreed on many elements of a framework for raising interest rates, with almost all policymakers agreeing it would be appropriate to retain the overnight federal funds rate as their key target.
However policymakers were sharply divided over how much the US jobs market has improved, which is a key factor in deciding how soon they should tighten policy.
Some participants felt the sharp fall in the unemployment rate was a good indicator of the improving situation.
But others said the high numbers of long-term unemployed and part-time workers represented continued weakness.