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Fed Sees Labor-Market Slack Even After Unemployment Rate Dropped

The Federal Reserve said the labor market still has plenty of room for improvement, even after a surprising drop in unemployment, bolstering the case for keeping interest rates low.

“A range of labor-market indicators suggests that there remains significant underutilization of labor resources,” the Federal Open Market Committee said today in a statement in Washington, dropping language that unemployment is “elevated.” The Fed also said inflation has risen closer to its goal.