海角大神

Some Federal Reserve officials think the economy is improving fast enough that the聽Fed聽will soon need to signal a change in the extraordinary support it's been providing the economy in the form of ultra-low interest rates.

Minutes of the聽Fed's聽discussion at its July 29-30聽meeting聽show that some officials thought the economy was improving enough that theFed聽would need "to call for a relatively prompt move" toward reducing the support it has been providing. Otherwise, they felt the聽Fed risked overshooting its targets for unemployment and inflation.

In the end, the聽Fed聽made no changes at the July聽meeting. It approved on a 9-1 vote keeping its current stance on interest rates. But the minutes indicated rising support for a change.

The July meeting also marked Fed chief Janet Yellen's first six months in office. She has won praise for guiding the Fed through its transition from the Ben Bernanke era. Her outlook statement Wednesday is highly anticipated.聽

The perilous question that now awaits Yellen's聽Fed聽has put investors on nervous alert: Can it manage to raise rates from record lows without weakening the U.S. economy or spooking markets?

Or, conversely, will it wait too long to raise rates, causing the economy to overheat and inflation to surge?

No one knows. Which helps explain the anticipation surrounding Yellen's speech Friday at the economic conference sponsored every August in Jackson Hole, Wyoming, by the Federal Reserve Bank of Kansas City. Given that this year's topic is labor markets, Yellen is sure to spell out her latest assessment of the U.S. job market.

Whatever she says 鈥� or, perhaps, doesn't say 鈥� will shape perceptions of when and how aggressively the聽Fed聽will raise rates.

Yellen has frequently characterized the job market as weaker than the unemployment rate suggests. She's noted, for example, that the jobless rate, now a nearly normal 6.2 percent, belies other unhealthy trends: Weak pay growth, a sizable number of part-timers who want full-time work and high proportions of people who've been looking for a job for more than six months or have stopped looking.

Might Yellen describe those trends as chronic problems with no end in sight? Or as likely temporary drags on the job market, destined to fade as the economy further improves? Investors will seek any sign of a coming rate hike because it would mean higher rates on business and consumer loans and could hurt stock prices.

At Jackson Hole, Bernanke would sometimes use his speeches to telegraph actions the聽Fed聽was considering. Yellen could take the opportunity to shed light on the聽Fed's聽plans for withdrawing the extraordinary economic support it's provided since 2008.

"The road ahead will get much tougher for Yellen when she starts outlining the聽Fed's聽exit strategy," said David Jones, chief economist at DMJ Advisors and the author of a book on the聽Fed's聽first century. "Any change could be accompanied by significant market instability."

This year, the聽Fed聽has been paring its monthly bond purchases, which have been intended to keep long-term rates low. Yellen has stressed that even after the bond purchases end this fall, the聽Fed聽will keep rates low and maintain its vast investment portfolio to keep downward pressure on rates.

The impending end of the purchases 鈥� a step investors once anticipated with dread 鈥� is now being taken in stride. The market has remained calm, and stocks are up this year, suggesting that Yellen's reassurances have had an effect.

That said, her first six months haven't been without stumbles. Consider her first news conference. Responding to a question, Yellen said that when the聽Fed聽stated it would keep its benchmark rate ultra-low for a "considerable time" after its bond purchases end, that phrase meant around six months.

Stocks sank on fears that rate increases could start sooner than expected.

Asked about her six-month comment at her next news conference, Yellen de-coupled the phrase "considerable time" from any specific period.

"It depends on how the economy progresses," she explained.

Diane Swonk, chief economist at Mesirow Financial, said Yellen was trying to be clear without perhaps recognizing how much a聽Fedchair's words can be over-interpreted.

"Yellen is a much clearer speaker than past聽Fed聽chairmen," Swonk said. "But Yellen learned the dangers from being too clear. She will never use the words 'six months' again."

Yellen has appeared comfortable fielding reporters' questions. She's also withstood grilling from members of Congress. Where Bernanke's voice would sometimes quaver under hostile questioning, Yellen has remained cool and has parried any attacks in a calm voice that hints of her native Brooklyn.

"It would be a grave mistake for the聽Fed聽to commit to conduct monetary policy according to a mathematical rule," Yellen explained to the House Financial Services Committee after some Republicans pressed her to back legislation to compel the聽Fed聽to follow a policy rule in setting rates.

Expressing the frustration that some Republicans say they feel about expanded聽Fed聽influence over the economy, the committee chair, Jeb Hensarling, R-Texas, told Yellen that "a dramatic increase in power calls for a corresponding increase in accountability and transparency."

Yellen has stressed that the unorthodox steps the聽Fed聽took to fight the recession were needed to put people back to work. She has sought to reverse any perception that the聽Fed聽distributed billions to prop up big banks during the financial crisis while doing little to help people who had lost jobs.

"Our goal is to help Main Street, not Wall Street," she declared in her first speech as chair. She spoke of "shattered lives and families" from high unemployment and said the聽Fed聽would keep working until the job market was healthy.

Despite months of solid hiring and declining unemployment, Yellen contends that too many people have been out of work for too long, that too many are stuck in part-time jobs and that pay growth is still anemic.

Challenging that view, though, are some聽Fed聽officials who sound more concerned about inflation. They argue that the聽Fed聽risks igniting inflation by waiting too long to raise rates.

One of them, Charles Plosser, head of the聽Fed's聽Philadelphia bank, dissented at the聽Fed's聽last聽meeting. He felt it was a mistake to keep signaling that rates will stay low for a "considerable time." Another, Richard Fisher of the Dallas聽Fed, expressed worries in an opinion column about the dangers of "staying too loose, too long."

Many analysts think Yellen will use Friday's speech to explain her continued support for low rates.

"Her position continues to be that the economy is improving but the labor market is not healthy enough to tolerate a hike in interest rates any time soon," said Sung Won Sohn, an economics professor at California State University, Channel Islands.

Most economists doubt the聽Fed聽will raise rates before mid-2015. Even when it does, it's expected to act only gradually 鈥� to limit inflation but avoid derailing the economy's recovery.

Yet a so-called soft landing often proves elusive.

"The聽Fed聽usually gets it right only about half the time," noted David Wyss, a former聽Fed聽economist who teaches at Brown University.