Members of the Federal Reserve lowered their expectations for economic growth and raised their projections of the nation’s unemployment rate, cautioning for the first time in recent memory that the low employment rate “over the next several years… would likely be below levels they consider to be consistent” with their mandate to maximize employment, according to meeting minutes released Wednesday.
The Fed is required by law to pursue policies that “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”
A review of minutes of the Federal Open Market Committee meetings dating back to September 2008 — the height of the financial crisis — reveal no other meetings in which central bank policymakers expressed such a dim view of the unemployment rate. While the minutes have expressed such caution regarding the expected inflation rate, they have not indicated that the low level of employment would be so low as to threaten their legal mandate to pursue those policies that maximize employment.
“A number of participants expressed the view that, over the next several years, both employment and inflation would likely be below levels they consider to be consistent with their dual mandate, but they anticipated that, with appropriate monetary policy, both would rise over time to levels consistent with the Federal Reserve’s objectives,” the minutes read.