Fed Divided on Further Stimulus

Source:

"Even if economic growth remains weak, unemployment and interest rates vie for policy makers' attention."

Bloomberg, Joshua Zumbrun and Jeannine Aversa

Federal Reserve policy makers disagreed on whether additional monetary stimulus will be needed even if the outlook for economic growth remains weak, minutes of their meeting last month showed.

"A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run," the Federal Open Market Committee said in the minutes of its June 21-22 meeting, released today in Washington.

"On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant" the FOMC "taking steps to begin removing policy accommodation sooner than currently anticipated."

Policy makers cut their forecasts for growth this year before a July 8 government report showed employers added jobs at the slowest pace in nine months in June. Chairman Ben S. Bernanke at a June 22 news conference said growth will pick up as energy prices subside and disruptions of parts from Japanese factories ease, while also leaving the door open to additional stimulus. In their meeting, policy makers also agreed on a strategy for withdrawing record monetary stimulus and adopted a new set of communications guidelines.

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