USA-Fed still divided on jobs and purchases- “minutes”

WASHINGTON, Aug. 18 (Reuters) – US Federal Reserve (Fed) officials estimated at their July meeting that their employment target – a condition for reducing monetary policy support to the economy – could be reached before the end of the year but was not yet at this stage, shows the report released on Wednesday.

“Most of the participants expected that the economy would continue to make progress towards these objectives” and that they “could be reached this year”, specify the “minutes” of the Fed.

“Several” participants felt that monetary policy still needed to provide support for the labor market, “a few” said the central bank had little to do with the recovery and “several” felt that the return to the employment situation which prevailed before the pandemic “may not be the appropriate benchmark” for deciding on a possible adjustment of monetary policy, because of the fundamental evolution of the economy.

The Fed left its monetary policy unchanged after two days of debate on July 28, while pledging to maintain strong support for the economy to help the recovery.

Several of its officials have since continued to fuel the debate on the timing of “tapering”, the gradual reduction in bond purchases made by the central bank on the markets which will mark the first stage of monetary tightening.

This debate is complicated on the one hand by the resurgence of the COVID-19 epidemic, on the other hand by the high level of inflation in the United States.

The majority of observers believe that the Fed will choose its next meeting, September 21 and 22, to formalize its intention to reduce its purchases of securities, which currently represent 120 billion dollars (102 billion euros) per month.

The president of the institution, Jerome Powell, could however give new indications during his speech next week at the seminar in Jackson Hole, in Wyoming, a traditional big meeting of the end of summer for the leaders of central banks. .

(Howard Schneider report, French version Marc Angrand, edited by Jean Terzian)

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