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The U.S. Federal Reserve building, in Washington, on Aug. 22, 2018.Chris Wattie/Reuters

Federal Reserve officials felt the employment benchmark for decreasing support for the economy “could be reached this year,” but had not yet been satisfied, according to minutes from the U.S. central bank’s meeting last month in which policy makers discussed when to end pandemic-era support and how to respond to higher-than-expected inflation.

“Most participants anticipated that the economy would continue to make progress toward those goals” and that the standard “could be reached this year,” the minutes of the July 27-28 meeting said, which were released on Wednesday.

Amid disagreement over how much longer the Fed should wait to begin trimming its US$120-billion in monthly purchases, “several participants” said monetary policy was still needed to fix labour-market damage from the pandemic, “a few” said Fed policy had little left to contribute and “several” said the condition of labour markets prior to the pandemic “may not be the right benchmark” given lasting changes to the economy.

At the conclusion of that meeting, Fed officials said they still had faith in the U.S. economic recovery even as the Delta variant of the coronavirus fuelled a troubling rise in cases, and continued laying plans for the eventual end of the central bank’s monthly purchases of Treasury bonds and mortgage-backed securities.

Although the health crisis has intensified in the past three weeks, the economic recovery remains largely on track. U.S. job growth was strong through July and inflation remained well above the Fed’s 2-per-cent target – so much so that some central bank policy makers have since urged a quick end to emergency programs that they argue have outlived their usefulness.

Demand is outstripping the ability of global supply chains and labour markets to keep pace, driving inflation higher. St. Louis Fed president James Bullard is among those who argue that the bond purchases should end soon so that the central bank can raise its benchmark overnight interest rate from the current near-zero level if needed. Fed officials want the bond-buying program completed before any hike in borrowing costs.

Analysts expect the Fed to announce its plan for a “taper” of its asset purchases as early as the Sept. 21-22 policy meeting, with less certainty about how fast the actually reduction in the bond-buying program will proceed.

Fed chair Jerome Powell may provide information as well in remarks to the central bank’s annual research conference in Jackson Hole, Wyo., next week.

The Fed acknowledged at its last meeting that progress had been made in recovering the jobs lost to the pandemic.

In December, the central bank said it would not reduce those purchases until there had been “substantial further progress” in the jobs recovery. At that point, the economy was around 10 million jobs shy of where it was before the pandemic. Employers have added 4.3 million jobs since then, including a total of nearly 1.9 million jobs in June and July, a pace some analysts expect to continue into the fall.

The Fed’s preferred measure of prices, the personal consumption expenditures (PCE) index excluding food and energy costs, rose at a 3.5-per-cent annual rate in June, its quickest pace in nearly 30 years. July’s reading is due late next week.

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