In the past, the Federal Reserve would fret over the U.S. unemployment rate worrying if it dipped below 5%. If the rate did drop below 5% it would cause inflation leading to higher borrowing costs and higher mortgage rates. CME Group’s FedWatch maintains that 91% of investors predict the Fed keeps its current rate in the January 2020 meeting.

Fed officials “discussed how maintaining the current stance of policy for a time could be helpful for cushioning the economy from the global developments that have been weighing on economic activity,” the minutes said.

Data showed that in November 2019, the jobless rate was 3.5%; making it the lowest since 1969.  The average annual salary rose to $69,181 which was up 3.4% from November 2018. As for the median household income, it was 7.5% higher than it was at the start of the Great Recession.

What the Federal Reserve does worry about is the decline in the U.S. manufacturing sector. According to the Institute for Supply Management index for factory activity in December 2019 the factory activity fell to the lowest level it has been in over 10 years.

“Overall manufacturing production appeared likely to remain soft in coming months, reflecting generally weak readings on new orders from national and regional manufacturing surveys, declining domestic business investment, slow economic growth abroad, and a persistent drag from trade developments,” the Fed minutes said.

“Participants remarked that there were some indications that further strengthening in overall labor market conditions was possible without creating undesirable pressure on resources,” according to the minutes of the Fed’s Dec. 10 to 11 meeting, released on Friday.

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