Fed Minutes Show No Haste to End Stimulus

By Binyamin Appelbaum –The NY Times

The Federal Reserve shows few signs of easing its aggressive efforts to stimulate growth before the middle of the year, according to the minutes of the most recent meeting of the central bank’s policy-making committee, released on Tuesday.

While some members of that committee have suggested in recent speeches that the Fed might reconsider its plans to buy $600 billion in Treasury securities by the end of June, the minutes show little evidence that the idea has gained traction among a majority of the 10 officials who sit on the committee.

Indeed, the Fed increasingly seems locked into its current plan — neither less nor more — in part because the economic recovery remains tentative and in part because of a stalemate between advocates of less and more.

The minutes portrayed skeptics of the program as increasingly resigned.

“A few members remained uncertain about the benefits of the asset purchase program,” the minutes said, “but judged that making changes to the program at this time was not appropriate.”

The Federal Open Market Committee, which meets eight times a year to set monetary policy, has been on a war footing since 2007, authorizing a series of extraordinary efforts to contain the financial crisis and restart growth. The next major decision confronting the committee is when to begin the return to normal.

The minutes make clear that a majority of the committee — comprising members of the Fed’s board of governors and selected presidents of the regional reserve banks — continues to believe that the economy needs help. Moreover, that majority is portrayed as relatively sanguine about the chances of unleashed inflation.

With so many people out of work, those with jobs have little leverage to demand higher wages. They lack the means to drive up prices. As a result, the Fed regards the recent increases in food and gas prices as unsustainable.

The chairman of the Fed, Ben S. Bernanke, on Monday described the price increases as “transitory.”

The prospects for the economy, which appeared to be growing strongly at the beginning of the year, also seem increasingly murky. The minutes said the committee viewed the chances of faster growth, and the risk of a slowdown, as “roughly balanced.”

Evidence of growth is accumulating, including reports of factories planning to hire workers and increase production, and consumers spending more on cars and other goods.

But home prices keep falling and governments at every level are cutting spending. In addition, Europe is ailing, there is a risk that oil prices will continue to rise and the effect of the disaster in Japan is “not yet clear,” the minutes said.

The committee next meets April 26.

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