Most at Fed still back stimulus
WASHINGTON — A majority of Federal Reserve policymakers want to continue extraordinary bond purchases to help boost the economy at least through the middle of the year, according to minutes from the Fed's last meeting released on Wednesday.
But some members indicated they want to slow and eventually end the program before the end of the year, as long as the job market and economy show sustained improvement. The Fed's purchases of about $85 billion a month in Treasury and mortgage bonds are intended to lower long-term interest rates and encourage more borrowing and spending.
The minutes of the Fed's March 19-20 meeting were released at 9 a.m. — five hours earlier than planned. The Fed inadvertently sent them a day earlier to congressional staffers and lobbyists.
“One gets the sense that many Fed policymakers are anxious to start paring back the size of the ... purchases as soon as the data allow,” Dana Saporta, an economist at Credit Suisse, said in a note to clients.
Still, a weak employment report released on Friday is likely to make policymakers more supportive of keeping the measures in place for the foreseeable future.
The report showed employers added just 88,000 net jobs last month, the fewest in nine months and much less than the average of 220,000 jobs a month established from November through February.
The unemployment rate dropped to a four-year low of 7.6 percent last month. However, the rate fell only because more people stopped looking for work and were no longer counted as unemployed.
In its statement after the last meeting, the Fed said the economy had strengthened but still needed its efforts to help lower high unemployment. In addition to continuing the bond purchases, the Fed stuck by its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
The minutes indicated that many of the Fed's members want to see sustained improvement in the job market — from a wide range of economic indicators — before making any decision to reduce the pace of bond purchases. Many members said an improved job market could lead them to slow purchases within a few months, and a few said economic conditions would likely justify continuing the program until late this year.
A few members want to end “relatively soon” the bond-purchase program. Those members said that the costs likely outweigh the benefits. Others saw the risks as increasing quickly and said the purchases would likely need to be reduced “before long.”
The Fed minutes were made public earlier than normal because it was revealed that about 100 congressional staffers and lobbyists received them at 2 p.m. Tuesday. They had been scheduled to be released at 2 p.m. Wednesday.
Stocks rose sharply when the minutes were released.