Fed Chairman Ben BernankeHere's the key point in the minutes of the Fed's policy-setting Federal Open Market Committee meeting on Nov. 2-3: The central bank now expects a weaker recovery, with as many as six years needed to return the unemployment rate to normal levels of 5% to 6%.

The Fed also held a special, undisclosed meeting on Oct. 15 "to discuss issues associated with its monetary policy framework including alternative ways to express and communicate the Committee's objectives." Among those issues was whether Federal Reserve Chairman Ben Bernanke should hold occasional press conferences.

Slower Growth, Higher Unemployment Seen


First, the data forecast. The Fed lowered its 2010 GDP growth estimate to a range of 2.4% to 2.5% from June's 3% to 3.5% projection. It also lowered its 2011 GDP forecast to 3% to 3.6% from June's 3.5% to 4.2%.

On unemployment, the Fed now expects a 2010 jobless rate of 9.5% to 9.7%, up slightly from the 9.2% to 9.5% June forecast, and a 2011 jobless rate of 8.9% to 9.1%, up from the 8.3% to 8.7% June forecast.

On inflation, the central bank now sees 2010 core-PCE inflation of 0.8% to 1%, up from June's 1% to 1.1% forecast, and 2011 Core-PCE inflation of 0.9% to 1.6%, slightly wider than June's 0.9% to 1.3%.

Both Sides of QE2

Most Fed board members expected the second phase of the Fed's quantitative easing policy, the so-called QE2, "to help promote a somewhat stronger recovery in output and employment while also helping return inflation, over time, to levels consistent with" the Fed's legislative mandate, the minutes said.

The dissenting voices were also noted: "Some participants noted concerns that additional expansion of the Federal Reserve's balance sheet could put unwanted downward pressure on the dollar's value in foreign exchange markets."

The Fed said it chose the small asset purchase approach, rather than larger purchases, due to the economy's recovery track. "Participants generally agreed that large adjustments had been appropriate when economic activity was declining sharply in response to the financial crisis. In current circumstances, however, most saw advantages to a more incremental approach that would involve smaller changes in the Committee's holdings of securities calibrated to incoming data," the minutes said.

At the Oct. 15 special meeting, in addition to discussing whether it would be "useful" for Chairman Bernanke to "hold occasional press briefings to provide more detailed information to the public regarding the Committee's assessment of the outlook and its policy decisionmaking," Fed officials also discussed whether to adopt a numerical inflation target. However, they opted to retain the policy of issuing long-term inflation projections.

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dad

bernanke has gone all in to save his reputation and his country by the only method that keynesian economists understand.to flood the world with so much fiat american script,that it will overwhelm all other fiat currencies and their puny printing presses,and in the end,seeing it is hopeless to fight the fed.the world will accept the dollar as a one-world currency.this is bernanke's ultimate fantasy.mine is that all who stashed away precious metals will be set for life.

November 24 2010 at 9:56 AM Report abuse rate up rate down Reply
John M. Zimmer

want to reduce the unemployment numbers in this country, insist on American Made Products, stop giving incentives to American companies to move to other countries

November 24 2010 at 9:44 AM Report abuse rate up rate down Reply
1 reply to John M. Zimmer's comment
bggdg

You mean buy a product made in America even if said product is less efficiently produced in Ameica than elsewhere? And in doing so, make sure we less resources are available to create jobs in those industries where we do have a comparative advantage by virtue of having forcibly dedicated resources to indsutries where we are less efficient? Because after all, everybody knows that the greatest economic growth comes to those with the most inefficiency? Brilliant!

November 24 2010 at 10:29 AM Report abuse rate up rate down Reply
John M. Zimmer

did he just figure this out?

November 24 2010 at 9:41 AM Report abuse rate up rate down Reply
stubit586

During the 1980's, the formula used to calculate inflation was changed. One of the many changes was the concept of "substitution," namely that if one item went up in price the consumer could substitute a similar product. If a can of beans goes up in price but a can of corn goes down, the corn is counted but not the beans. If the reverse happens next month then beans are counted but not the corn. To actually experience the Fed's posted inflation rate, a consumer would have to comparasion shop for the lowest priced item which could substitute for what they really want.

November 24 2010 at 4:38 AM Report abuse +2 rate up rate down Reply
Gumby

Big Oil had been boasting all along on horizontal drilling that boosted old dying oil reserves which was very true. Until recently, molybdenum prices shot up ten fold and it was used in strengthening steel drill pipes. Big Oil seemed to abandon horizontal drilling quielty, didnt they?

November 24 2010 at 12:05 AM Report abuse rate up rate down Reply
Gumby

I just cant understand why we all of a sudden start talking about job rebound after decades of outsourcing jobs overseas. Also, I just cant understand why nobody is owning up to the fact that America had been increasing oil imports for decades since the oil embargo in 1973. We now import well over half of our oil. The rich shipped jobs overseas so that they can continue to drive gas guzzlers. Where was the Fed Chairman the whole time? I had always assumed that the Chairman knew what he was doing.. If I were the Chairman, I would have made very firm recommendations that CAFE be raised to 35 mpg or higher a long time ago. We can hire workers fast but this will get oil prices up so fast that it would become pointless moot to do so. We are still not doing much enough to increase energy supplies especially coming from alternate sources.. We have yet to swallow the inconvenient truth at all!

November 24 2010 at 12:02 AM Report abuse rate up rate down Reply
1 reply to Gumby's comment
bggdg

Gumby, existing market incentives to develop alternative energy sources/supplies are enormous. Because of these huge incentives, literally billions is being invested annually for just such a purpose. Of course, anybody who imagines such investment is insuficient remains free to add to the existing level of investment by investing their own resources in such an endeavor. The good news is that if their added investment happens to find a feasible alternative, they'll be rearded quite handsomely for the risk they assumed.

November 24 2010 at 10:41 AM Report abuse rate up rate down Reply
Gumby

I just cant understand why we all of a sudden start talking about job rebound after decades of outsourcing jobs overseas. Also, I just cant understand why nobody is owning up to the fact that America had been increasing oil imports for decades since the oil embargo in 1973. We now import well over half of our oil. The rich shipped jobs overseas so that they can continue to drive gas guzzlers. Where was the Fed Chairman the whole time? I had always assumed that the Chairman knew what he was doing.. If I were the Chairman, I would have made very firm recommendations that CAFE be raised to 35 mpg or higher a long time ago. We can hire workers fast but this will get oil prices up so fast that it would become pointless moot to do so. We are still not doing much enough to increase energy supplies especially coming from alternate sources.. We have yet to swallow the inconvenient truth at all!

November 24 2010 at 12:01 AM Report abuse rate up rate down Reply
scottee

The Fed needs to be audited and ended and they need to put the dollar back on the gold standard to stop the printing and diluting of our dollar!

November 23 2010 at 9:31 PM Report abuse +2 rate up rate down Reply
bootjack

How's that "grope and Chains" working for you?

November 23 2010 at 8:16 PM Report abuse +2 rate up rate down Reply
bootjack

Uncle Ben is a traitor...Barry and George Soros "YES" boy.

November 23 2010 at 8:14 PM Report abuse +3 rate up rate down Reply