FOMC Sees Potential Tapering at Coming Meetings, Minutes Show

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Federal Reserve Chairman Ben Bernanke Speaks At Nat'l Economists Club Annual Dinner
Chip Somodevilla/Getty Images
By Dunstan Prial

Federal Reserve policy makers are still struggling to find the right message to convey to investors on their plans for scaling back its easy-money policies, notes from the Fed's October meeting reveal.

The minutes, released Wednesday, also said members of the policy-setting Federal Open Market Committee could see the central bank trimming its $85-billion-a-month bond-buying program at "one of its next few meetings."

The FOMC saw the U.S. economy growing at a "moderate" pace and discussed various public communications strategies aimed at more clearly describing the Fed's forward guidance.

Some members seemed to lean toward a more unified message, one that continued "laying the groundwork" for a reduction in the Fed's monthly bond purchase program known as quantitative easing, "while emphasizing that the overall stance of monetary policy would remain highly accommodative."

The Fed has been criticized in recent months for sending mixed-messages as to when and how it will begin scaling back its long-running stimulus programs initiated following the 2008 financial crisis.

After telegraphing for months that it would begin tapering its monthly bond purchases in September,
the FOMC surprised markets by maintaining its programs at the conclusion of its September meeting. The Fed made the same decision in October -- to maintain bond purchases at $85 billion a month and to keep interest rates near zero.

Another criticism leveled at the Fed recently is that it has become a little too transparent. Specifically, critics have conflicting speeches by FOMC members with differing views on monetary policy have added to the confusion over where the Fed is headed.

Policy doves such as New York Fed President William Dudley have made it clear in various speeches that stimulus programs should be left in place until the economy strengthens sufficiently.

Meanwhile, policy hawks like Kansas City Fed Esther George have warned of runaway inflation and asset bubbles if the programs are left in place too long.

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