New York Fed Chairman John Williams and Atlanta Fed Chairman Raphael Bostic, both voting members of the Federal Open Market Committee (FOMC) that sets central bank policies, are among those who want more information before making a final decision.
In December, the Fed said it would not change bond purchases until there was “further substantial progress” in recovering the 10 million jobs that were missing at the time due to the pandemic.
Linking monetary policy to the level of job losses from the pandemic made sense at the time, as the country was concerned about a further slide into recession and COVID-19 vaccines had not yet been widely distributed.
Now the Fed’s stance leaves lawmakers dependent on a staggered job revival, shaped by forces as disparate as the availability of child care or opposition to mask mandates in large states like Florida and Florida. Texas and its effect on hiring and people’s ability to work.
By August, the economy had recovered less than half of those 10 million lost jobs. Other relevant statistics, such as the employment-to-population ratio, are below what officials such as Richmond Fed Chairman Thomas Barkin say they want to see before concluding that the labor market has healed enough to start shrinking. bond purchases.
Some Fed officials, including Governor Christopher Waller, want to start tapering as soon as possible, arguing that the purchases are doing little to help recruit people and pose a risk if, by keeping interest rates low at long-term, they fuel bubbles in segments such as housing.
With inflation also higher than expected for most of the past few months, other officials have said that bond purchases should end in early 2022. However, a recent weakening in inflation, as expected by many other government officials. The Fed can moderate any sense of urgency to act faster.