The Federal Reserve foresees the need to provide additional stimulus to prop up a slackening economic recovery 'before long' the minutes of the last policy-setting meeting showed this evening.
While the minutes of the Federal Open Market Committee provided no specific details on plans for any new stimulus, they showed broad consensus on the idea that such action likely could be swift if economic conditions warranted.
The wording in the FOMC's brief statement at the end of its September 21 meeting that the central bank was prepared 'to provide additional accommodation if needed' to support the recovery, was decided after members were briefed on mostly worsening conditions since the August 10 committee meeting.
'Such an indication accorded with the members' sense that such accommodation may be appropriate before long, but also made clear that any decisions would depend upon future information about the economic situation and outlook,' the minutes said.
Inclusion of that signal in the FOMC's statement last month has fired up market speculation the Fed will soon pump money again into the economy through major asset purchases, a measure known as quantitative easing.
The markets have been abuzz with rumours of when the Fed's new round of purchases, dubbed QE2, could occur. The speculation has helped drive stock and bond markets sharply higher and weakened the dollar.
Many observers say a Fed announcement could come as soon as November 3, at the conclusion of a two-day committee meeting. Some predict the Fed led by chairman Ben Bernanke will wait until the next meeting, on December 14.
The Fed has bought about $1.5 trillion in bonds and securities since the financial crisis kicked into high gear two years ago.
