Some voices at the Federal Reserve said more stimulus is needed for a still struggling U.S. economy.
“A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at the committee’s goal,” according to the Federal Open Market Committee June meeting minutes released Wednesday.
Some on the committee went so far as to begin discussing a ceiling for Fed asset purchases, in order to avoid “meaningful deterioration in securities market functioning,” and the costs that would have on the overall economy.
The FOMC still believes unemployment will continue to improve, just slowly and with much uncertainty because of the shaky global economy.
“The committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the committee anticipates that the unemployment rate will decline only slowly toward lev- els that it judges to be consistent with its dual mandate,” according to the minutes.
During his monthly press conference following the meeting last month, Fed Chairman Ben Bernanke announced only an extension to the average maturity of its securities holdings — known as Operation Twist — through the end of 2012.
He did say the Fed was prepared to take further action, possibly a long anticipated third round of quantitative easing or the mass buying of different bonds or Treasury bills, as reflected in the minutes.
“Several others noted that additional policy action could be warranted if the economic recovery were to lose momentum, if the downside risks to the forecast became sufficiently pronounced, or if inflation seemed likely to run persistently below the committee’s longer-run objective,” according to the minutes.
