Many members of the Federal Reserve thought that underemployment would be "largely eliminated" soon if the economy keeps up its current growth, an account of their July meeting published Wednesday showed.
Yet the summary of the central bankers' conversations at the meeting revealed mixed and conflicting information about the bank's plans for monetary policy.
Most of the officials thought that the economy was not yet strong enough to tighten the money supply, but also believed that "conditions were approaching that point," according to the minutes.
While they viewed the labor market as still unhealthy, they thought that continued growth meant it could reach full employment in the "near term."
One piece of missing evidence, the minutes show, was "the lack of convincing signs of accelerating wages." Members of the Fed took the lack of wage growth as a sign that the unemployment rate may be able to fall below its current 5.3 percent without inflation picking up.
Different members of the committee, who are not identified by name in the minutes, disagreed about how to interpret recent inflation readings, which have shown inflation below the Fed's 2 percent goal. Some were confident that prices would rise more quickly as the economy heated up, while others were not convinced.
And at least one member of the 10-person monetary policy committee was ready to raise rates in July. He or she, however, was also willing to wait for further confirmation of the economy's health and did not dissent from the July monetary policy action.
The minutes from the July 28-29 meeting were apparently leaked early, as Bloomberg News reported on them before the 2 p.m. Wednesday scheduled release. The early market reaction indicated that traders viewed the minutes as a sign that the Fed might wait longer to move on interest rates.
The minutes were released Wednesday as members of the Fed consider whether to take the historic step of raising the central bank's interest rate target at their mid-September monetary policy meeting.
The Fed, under Chairman Ben Bernanke and now Janet Yellen, has held short-term interest rates near zero since 2008 in an effort to counteract the recession. It has not raised rates since 2006.
Investors closely watch for any clues about which way Fed officials will go because the Fed's short-term interest rate target influences all other interest rates throughout the system, including those on personal debts such as mortgages and on business loans.
In recent weeks, private-sector economists have increasingly said that they expect Yellen and company to raise rates at their September meeting. Fed-watchers are turning now to guessing how quickly rates will rise after the first increase.