ben bernanke chairman federal reserve minutes fomc meeting
Manuel Balce Ceneta/APFederal Reserve Chairman Ben Bernanke
By Pedro da Costa and Alister Bull

WASHINGTON -- Even as consensus built within the Federal Reserve in June about the likely need to begin pulling back on economic stimulus measures soon, many officials wanted more reassurance the employment recovery was on solid ground before a policy retreat.

Financial markets have largely converged on September as the probable start of a reduction in the pace of the U.S. central bank's $85 billion in monthly bond purchases, but minutes of the Fed's June meeting released on Wednesday suggested that might not be a sure bet.

"Several members judged that a reduction in asset purchases would likely soon be warranted," the minutes said. But they added that "many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases."

Global investors have recently recovered from a mild bout of panic that followed Fed Chairman Ben Bernanke's road map for an end to so-called quantitative easing, which he said would likely draw to a close by the middle of next year. Financial market fears have been allayed in part by a chorus of Fed officials who have sought to reassure traders that the end of asset buys will not lead to imminent interest rate hikes.


"Many members indicated that decisions about the pace and composition of asset purchases were distinct from decisions about the appropriate level of the federal funds rate," the minutes said.

Whether the markets have gotten the message isn't fully clear; the yield on the 10-year U.S. Treasury note has risen a full percentage point in just two months and stands close to its highest levels since 2011.

This has already slowed activity in the mortgage market, which had been key to the recent economic rebound.

At their June meeting, some Fed officials worried not only about the outlook for employment, but the pace of economic growth as well. Many economists believe the economy grew at less than a 1 percent annual rate in the second quarter, although most look for a pick-up in the second half of the year.

"Some [officials] added that they would ... need to see more evidence that the projected acceleration in economic activity would occur, before reducing the pace of asset purchases," the minutes said.

Of the Fed policymakers who argued it would be wise to curtail bond purchases soon, two thought it should be done "to prevent the potential negative consequences of the program from exceeding its anticipated benefits."


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granaryst

Then cut government spending. The sequester is working... Cut twice as much and it will work twice as well.

July 10 2013 at 4:51 PM Report abuse +2 rate up rate down Reply
parthenon1

There is no reason to keep squandering the money of future tax payers with the wasteful bond buying all that is needed for job growth is to scale back and block both the NLRB and stop the EPA from making laws without them going through the house for vetting. Business will start hiring dramatically when they have a stable business climate.

July 10 2013 at 4:40 PM Report abuse +3 rate up rate down Reply
nsoccio

How much longer can can Helicopter Ben go on lying to the American Public. What the hell doe's unemployment have to do with interest rates. NOTHING ABSOLUTELY NOTHING. The only reason he's kept interest rates the lowest that they've ever been in history is keep all his cronies at the big banks FAT. If the boob is really interested in helping the American public why are Credit Cards (THE BIG BANKS AGAIN) allowed to charge whatever the want for interest some as are high as 31.5%. Another one of his deals is to raise the interest rates on student lloans to 6.5%. He's completely destroyed the real economy, with real responsible people. If he dosn't get the hell out of there soon were all doomed.

July 10 2013 at 4:25 PM Report abuse +2 rate up rate down Reply
2 replies to nsoccio's comment
h.hughjardon

Wow...if you actually knew WTF you were talking about you'd be scary.

July 10 2013 at 6:08 PM Report abuse -1 rate up rate down Reply
gbaker9916

Actually there is a very interesting theory that they are keeping interest rates low because the federal government owes so much money. If interest rates go up, it goes up on the federal debt too.

July 10 2013 at 10:38 PM Report abuse +2 rate up rate down Reply
cpo1514

Obama did change America to Part-time America. There is no free meal.

July 10 2013 at 3:57 PM Report abuse +4 rate up rate down Reply
donut999

If it takes job growth (good jobs) improving, then QE will be with us for a long time. The good jobs are gone and they are not coming back at least for a decade, maybe never. Companies got lean and mean in 08 and 09. They found out they could operate that plant which used to have 1,000 workers with just 600. If and when they find themselves needing 100 more, they will hire 200 to work 20 hours a week and avoid a long list of benefit expense.

July 10 2013 at 3:27 PM Report abuse +5 rate up rate down Reply