The U.S. Federal Reserve
policymakers expressed broad support last month for the Fed's bond
buying program, but they were divided on how long to keep the
program aimed at shoring up the economy, the central bank's policy
meeting minutes showed on Thursday.
While almost all members thought that the asset purchase program had been effective and supportive of growth, they also generally saw that the "benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the balance sheet increased," the Fed noted in minutes released on Thursday for a Federal Open Market Committee (FOMC) meeting held from Dec. 11 to 12.
In their discussion for future policy action, a few FOMC members said that ongoing asset purchases would likely be warranted until about the end of 2013, while several other members thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet, the minutes showed.
At its last meeting, the Fed announced that it would purchase longer-term U.S. government debt at a pace of 45 billion U.S. dollars per month on top of the existing program of asset purchases that began in September.
In a statement following the meeting, the Fed said it would continue its purchases of Treasury bonds and mortgage-backed securities until the outlook for the labor market "improve substantially."
With federal fiscal policy assumed to be tighter in 2013, the FOMC members generally expected that the economic growth would not materially exceed the growth rate of potential output, according to the minutes.
The FOMC's next meeting is scheduled for January 29-30. Its ultra- loose monetary policy stance is expected to be sustained.
Some economists cautioned that a long-period of historically- low interest rate since the end of 2008 and large asset-buying programs have underpriced credit and increased risk taking, fueling asset bubbles in the global stock and commodity markets, but could not provide a strong boost to U.S. business hiring and economic recovery.
(c) 2013 Xinhua News Agency - CEIS. Provided by ProQuest LLC. All rights Reserved.
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