Fed notes labor market progress, but not convinced yet - minutes

WASHINGTON Wed Aug 20, 2014 2:00pm EDT

WASHINGTON Aug 20 (Reuters) - The Federal Reserve has been surprised by how quickly the U.S. labor market is healing but doesn't want to bring forward a planned rate hike until the recovery looks more convincing, according to minutes of its last policy meeting.

"Labor market conditions had moved noticeably closer to those viewed as normal in the longer run," according to the minutes of the central bank's July 29-30 meeting, which were released on Wednesday.

Policymakers "generally agreed" that improvements in the labor market over the last year had been "greater than expected," according to the minutes.

The Fed had said in its policy statement following the meetings that there was "significant" slack in the labor market, but the minutes showed many members of the Fed's policy-setting committee thought this characterization "might have to change before long."

They also showed officials had largely agreed on many elements of a framework for raising interest rates, with almost all policymakers agreeing it would be appropriate to retain the overnight federal funds rate as their key target. (Reporting by Jason Lange; Editing by Paul Simao)