Many on FOMC Favored Easing Soon if No Pickup in Growth

Story by Bloomberg
Written by Joshua Zumbrun and Jeff Kearns

 Many Federal Reserve policy makers said additional stimulus would probably be needed soon unless the economy shows signs of a durable pickup, according to minutes of their most recent meeting.

“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” according to the record of the Federal Open Market Committee’s July 31- Aug. 1 gathering released today in Washington.

Policy makers said after the meeting that they will step up record stimulus if needed to spur growth and cut a jobless rate stuck above 8 percent since February 2009. Chairman Ben Bernanke will have an opportunity to clarify his views in an Aug. 31 speech at a forum for central bankers in Jackson Hole, Wyoming, where he signaled a second round of bond buying by the Fed in 2010. Fed officials next meet on Sept. 12-13.

Many participants at the Fed’s meeting said that a new large-scale asset-purchase program “could provide additional support for the economic recovery.”

The minutes also reflected discussion of the merits of purchasing Treasury securities relative to mortgage-backed securities. While “some” members worried about the impact on debt markets, a staff analysis showed “substantial capacity for additional purchases without disrupting market functioning.”
http://www.bloomberg.com/news/2012-08-22/many-on-fomc-favored-easing-soon-if-no-sustained-growth-pickup.html