"Committee participants generally viewed the increases in nonfarm payroll employment of more than 200,000 per month in October and November and the decline in the unemployment rate to 7 percent as encouraging signs of ongoing improvement in labor market conditions," the Federal Open Market Committee, the Fed's monetary policy, said Wednesday in notes of its Dec. 18-19 meeting. "Several cited other indicators of progress in the labor market, such as the decline in new claims for unemployment insurance, the uptrend in quits, or the rise in the number of small businesses reporting job openings that were hard to fill."
The meeting minutes show some participants worried that financial markets might misread the move as a step toward raising its key short-term interest rate, while others expressed concern that "tapering" might be premature. The bond purchases are intended to keep long-term rates low.
"Several participants stressed that the unemployment rate remained elevated, that a range of other indicators had shown less progress toward levels consistent with a full recovery in the labor market and that the projected pickup in economic growth was not assured," said Peter Boockvar, chief market analyst with The Lindsay Group, in a note to clients.
In response, the Fed said it would keep its short-term rate low "well past" the time the unemployment rate dropped below 6.5 percent, as long as inflation stayed low. Some members wanted to lower the unemployment threshold to 6 percent. But the majority wanted to make no change to the threshold.
Jim O'Sullivan, chief U.S. economist with High Frequency Economics, said that latest minutes suggest that the Fed will continue gradually scaling back its bond-purchase program.
Financial markets seemed to take the Fed minutes in stride. The yield on 10-year Treasury notes, which have hovered around 3 percent in recent weeks, was at 2.99 percent shortly before the trade of closing.