The Federal Reserve felt at its December meeting that the US economy still needed help despite signs of strength. This is according to minutes of the meting released tonight which showed little appetite to trim bond-buying plans.
Some Fed officials indicated a ‘fairly high’ threshold for reconsidering the $600 billion in purchases first announced back in November, while others thought more time was needed before any such re-evaluation.
The tone of the minutes suggested that anyone thinking the Fed might curtail its controversial bond-buying plans, known in the markets as the second round of quantitative easing or QE2, may be getting ahead of themselves.
The December 14 meeting minutes noted that ‘members generally felt that the change in the outlook was not sufficient to warrant any adjustments to the asset-purchase programme’.
Wall Street economists have been busy revising up their forecasts for economic growth in recent weeks due to figures showing business activity and consumer spending picking up steam. But the Fed's policy-setting panel was much less sanguine.
The US economy, having emerged from its deepest recession in generations in the summer of 2009, has since expanded in fits and starts. Gross domestic product rose at a 2.6% annual rate in the third quarter, a pace still seen as too low to bring down the country's 9.8% jobless rate.
The minutes did suggest the central bank is counting on a short-term boost to the economy from the recent tax cut deal between President Barack Obama and Republicans in Congress.
