Federal Reserve minutes reveal members' disagreement over tapering of bond purchases
WASHINGTON — Federal Reserve officials seem far from a consensus on the question that's consumed investors for months: When will the Fed slow its bond purchases?
Minutes of their June 18-19 policy meeting released Wednesday show many of the 19 officials felt the job market's gains would have to be sustained before the Fed would scale back its bond purchases, which have helped support spending and growth, lifted stocks and kept mortgage rates near record lows.
Later in the day, Chairman Ben Bernanke stressed that the economy still needs support from the Fed's low-rate policies. Speaking in Cambridge, Mass., to the National Bureau of Economic Research, Bernanke noted that unemployment remains high and that higher taxes and federal spending cuts are weighing on growth.
“A highly accommodative monetary policy for the foreseeable future is what is needed for the U.S. economy,” Bernanke said.
It was his latest effort to emphasize to investors that even after the Fed has begun to slow its bond purchases, it will continue to stimulate the economy.
At the June policy meeting, many Fed officials thought the purchases should extend into 2014, according to a summary of economic forecasts that are released with the minutes. Still, several thought a slowdown in purchases could start soon.
One faction backed an aggressive timetable: According to a summary of economic forecasts released with the minutes, about half the “participants” favored ending the bond purchases late this year — months earlier than Bernanke has indicated. Participants include voting and non-voting officials on the Fed's policy committee.
The minutes suggest that a slowdown in the bond buying in September “is not quite a done deal,” said Michael Hanson, economist at Bank of America Merrill Lynch. “For a taper in September, we may still need to see some more improvement in the economy.”
Yet even the analysts differ. Dana Saporta, an economist at Credit Suisse, said she still thinks the Fed will start pulling back its purchases in September.
The jobs report for June, released Friday, “went at least some way towards satisfying those who were looking for more improvement in labor market conditions,” Saporta said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Stocks finish weak before Thanksgiving holiday; energy firms give back some gains
- Union leaders warn Post-Gazette newsroom of possible layoffs
- German financial giant Allianz SE slashes coal investments
- Coke had hand in shaping nonprofit health group, emails show
- Mall stores required to open for Thanksgiving
- Covestro leader MacCleary finds stability amid change
- Feds upgrade GDP’s growth
- Black Friday loosens its hold on the holiday season
- New rules proposed for high-speed traders
- Powder metals fabricator Atlas Pressed Metals diversifies appeal to customers
- Stocks shake off Middle East tensions, drop in consumer confidence