The Most Important Line From the Just-Released Federal Reserve Meetings

This is really the only thing you need to know about the just-released minutes of the last Federal Reserve Open Market Committee meeting (PDF):

“Looking beyond the temporary effects on inflation of this year’s fluctuations in oil and other commodity prices, almost all participants continued to anticipate that inflation over the medium-term would run at or below the 2 percent rate that the Committee judges to be most consistent with its statutory mandate.”

As I said earlier this week, just forget about jobs and growth. What you have here is the monetary policymakers deliberately adopting policies that they themselves believe would push the inflation rate below the 2 percent target. That’s not a policy that’s consistent with rapid growth in employment, and it’s why we won’t see rapid growth in employment. An elevated span of high joblessness keeps wages and commodity prices nice and low.