Hot or not? Fed policymakers weigh 'maximumer' employment

By Jonathan Spicer

(Reuters) - After a government report on Friday showed wage pressures remained muted even as U.S. employers added far more jobs than expected in February, one U.S. central banker advocated a pause on rate hikes, another waxed sarcastic about the Fed's view of maximum employment - and a third hinted he could support even faster rate hikes.

The disparate views highlight the main uncertainty when the Fed next meets to set policy in just under two weeks: with a March rate hike in the bag, should investors continue to expect just two more rate hikes later in the year, or will policymakers signal more may be needed to temper the boost from tax cuts, government spending, and overseas strength?

Fed policymakers will issue fresh forecasts at the end of the March 20-21 meeting, and Fed Chairman Jerome Powell, who last week said his view of the economy had strengthened, will hold his first news conference since he took the lead at the central bank from Janet Yellen.

In remarks prepared ahead of Friday's report, but released a few hours afterwards, Boston Fed President Eric Rosengren urged "regular but gradual" interest-rate rises so as to avoid a boom-and-bust economy as falling unemployment puts more upward pressure on inflation and wages.

Those rate hikes may need to be "a bit faster" than the three rate hikes forecast by most Fed policymakers in December, said Rosengren, whose remarks were in line with several of his colleagues, including New York Fed chief William Dudley.

Meanwhile Chicago Fed President Charles Evans, whose dovish views have fallen increasingly out of the Fed mainstream, said Friday the "strong" jobs report and "good news" of sidelined workers returning to the labor force did not salve his nervousness about low inflation.

"My own preference would be to wait a little bit longer" on raising rates, he told CNBC in an interview, adding that he would at least like to see March inflation data before raising rates further.

Minneapolis Fed President Neel Kashkari, who like Evans dissented against the Fed's rate hike in December, went further, making fun of many of his colleagues' assessments that the U.S. economy had already reached the Fed's goal of "maximum" employment even before employers found workers to fill more than 300,000 jobs in February.

"We are now at maximumer employment," Kashkari quipped on Twitter. Explaining his sarcasm in a second tweet, he said, "We keep saying we are at max employment and then all these people choose to work. It suggests we weren't really at max employment."

(Reporting by Jonathan Spicer, Ann Saphir, Richard Leong, Howard Schneider and Lindsay Dunsmuir.; Editing by Chizu Nomiyama and Andrea Ricci)

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