Though most Fed officials agree the economy has nearly reached full employment, the big question is what to do next—and here the Fed is divided into two camps.
One contingent believes the Fed should do what it can to help lower unemployment below its current 4.9% before providing any economic stimulus like boosting interest rates, while others fear further lowering of unemployment could cause runaway inflation. Fed governors Lael Brainard and Daniel Tarullo are of the former camp, arguing that pushing unemployment lower will give more Americans—particularly minorities—the chance to re-enter the labor market, the Wall Street Journal reports.
San Francisco Fed president John Williams fears letting the jobless rate get too low will spur a surge in prices and force the Fed to raise short-term interest rates. Each camps is searching for the sweet spot between inflation and the labor market. [WSJ]
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