A top Federal Reserve official said Tuesday that policymakers may be accepting a higher level of unemployment as their goal in the future.
Policymakers may in the past have considered a jobless rate of around 4.75 percent to be full employment, and his own view of that number was around 5 percent, said Chicago Federal Reserve Bank President Charles Evans in response to questions after a speech to the National Association for Business Economics.
However, he said lingering labor market problems stemming from the deep recession may have pushed up that longer-term rate to the vicinity of 5.25 percent.
In his speech, Evans said weak U.S. labor markets are likely to justify easy money policies for quite a while longer.
"Labor market issues ... lead me to think this accommodation will likely be appropriate for some time," Evans said.
Recent reports on the jobs market have been mixed, said Evans, who is not a voter on the Fed's policysetting panel this year.
"Once you look past the headline numbers, however, some other labor market indicators are unusually weak," he said, pointing to the length of time people stay unemployed as a worrisome trend.
Evans further said that despite debate over how much slack there is in the economy, high unemployment levels make it undeniable that output is well below the economy's potential.
He also argued that the Fed has taken its extensive purchases of long-term assets, which are scheduled to end this month, as far as has been useful in supporting the economy.
However, he left open the door to further purchases if economic conditions change.
The U.S. unemployment rate held steady at 9.7 percent in January, and the Fed — the U.S. central bank — is expected to use its policy meeting next week to renew its promise to hold benchmark interest rates exceptionally low for an extended period as long as the jobless rate remains high and inflation tame.
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