, Columnist
The Fed May Have Jumped the Gun on Full Employment
The failure to acknowledge slow wage growth may result in tighter policy than is needed.
They haven't taken over yet.
Photographer: Chung Sung-Jun/Getty ImagesThis article is for subscribers only.
U.S. central bankers seem to feel that when it comes to employment, they’ve done about as much as they can. The Federal Reserve’s Monetary Policy Report released last week concluded that the labor market was “at or a little beyond full employment.”
The Fed should approach the issue with a healthy degree of skepticism. Full employment may be more of a moving target than the central bank is willing to admit. The failure to acknowledge this could result in tighter policy than is needed. Policy makers should resist calls to speed up the pace of tightening, and investors should wait to rethink their curve flattening positions.