WASHINGTON—U.S. Federal Reserve officials on Monday turned their focus toward a debate over monetary policy that will heat up in coming months as the Fed slows the pace of its asset purchases, clearing the decks for interest rate hikes as soon as next year. At the center of the debate will be an assessment of how many more jobs the economy can add, and how much longer high inflation can be tolerated, given that the rate of price increases is already pushing beyond comfortable levels. Fed Vice Chair Richard Clarida said that while the U.S. central bank remains “a ways away from considering raising interest rates,” if his current outlook for the economy proves correct, then the “necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022.” Inflation to date already presents “much more than a ‘moderate’ overshoot of our 2 percent …
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