The Federal Reserve's minutes for the late January policy meeting reflect unease within the Open Market Committee with the current unemployment target.
The Fed has kept its federal funds rate, the overnight rate it charges banks for borrowing, at zero to 0.25 percent since December 2008. It has since pointed to 6.5 percent unemployment as a target that would signal it was time to raise the rate.
The unemployment rate has, indeed, come down, hitting 6.6 percent in January. Fed officials, however, including the recently resigned chairman Ben Bernanke, have noted in recent months that the people giving up on finding a job has been a significant portion of the reason the unemployment rate has dropped.
New Fed Chairwoman Janet Yellen in testimony presented on Capital Hill on Feb. 11 echoed that concern.
"Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high," she said.
"These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labor market," she said.
The Fed's meeting minutes from a Jan. 28-29 policy meeting also reflect hesitation at using the unemployment rate alone as a determinant for policy.
"The maximum level of employment is largely determined by non-monetary factors that affect the structure and dynamics of the labor market. These factors may change over time and may not be directly measurable," the minutes explain in a statement considered by the committee.
Voting members of the committee approved a statement that said central bank would "keep the target range for the federal funds rate at zero to 0.25 percent and currently anticipates that this exceptionally low range ... will be appropriate at least as long as the unemployment rate remains above 6.5 percent," as long as inflation is expected to stay "be no more than a half percentage point above the Committee's 2 percent long-run goal."
Faced with a streak of disappointing economic reports, including two consecutive under-expectations job-creation reports, the Fed said "economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors."
Policy members voted 11-1 to approve the policy shift of dropping its asset purchases from $75 billion per month to $65 billion, maintaining its steady tapering of the quantitative easing program for the second consecutive month.
Original headline: Fed policymakers reconsidering unemployment target
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