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.
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