Federal Reserve officials from two regional banks Thursday underlined the importance in seeing continued economic growth and improvements in the labor market, while acknowledging the need to raise the fed funds rate to neutral to combat higher-than-desired inflation that could put pressures on the jobs market.
"The goal here is to try to have sustaining growth, and that occurs over an extended, as long a period as possible. What we've seen through our experience is that longer economic expansions allow groups that have not historically participated in the marketplace to participate more," said Raphael Bostic of the Atlanta Fed in an online event on inclusive employment hosted by the Chicago Fed. "We've got to be trying to do a balancing act here," he added, referring to current inflationary pressures.
Charles Evans of the Chicago Fed said the Fed needs to be careful about overdoing the policy normalization and disagreed with the notion the current labor market is unhealthy. "You just don't want to preempt the best possible labor market that we can achieve until you're very confident," he said. "Clearly the unemployment rate is low at 3.6%," Evans said, adding he would like to see the labor force participation rate move higher and retirees move back into the labor force.