WASHINGTON (7/11/13)--Nearly half of the members of the Federal Open Market Committee (FOMC) support ending the Federal Reserve's quantitative easing policy late this year, but many say they want to see more signs of improvement in employment first, according to minutes of the Fed monetary policymakers' June 18-19 meeting.
The FOMC minutes, released Wednesday afternoon, said that many participants "anticipated it would be appropriate to end assets purchases late this year," while "many other participants anticipated that it likely would be appropriate to continue purchases into 2014."
Regarding the outlook for policy, "many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases," said the minutes, referring to the Fed's policy of purchasing $45 billion a month in Treasuries and $40 billion a month in agency mortgage-backed securities.
"However, several members judged that a reduction in asset purchases would likely soon be warranted, in light of the cumulative decline in unemployment since the September meeting and ongoing increases in private payrolls, which had increased their confidence in the outlook for sustained improvement in labor market conditions," the minutes said.
Two members indicated that the FOMC should "begin curtailing its purchases relatively soon in order to prevent the potential negative consequences of the program from exceeding its anticipated benefits."
The minutes also noted that most members anticipated that growth of real gross domestic product (GDP) would pick up somewhat during the second half of 2013. [Editor's note: A week after the FOMC meeting, the Commerce Department announced that the GDP increased more slowly than economists originally estimated (News Now June 27).]
Also, "most participants expected inflation to begin to move up over the coming year as economic activity strengthened, but many anticipated that it would remain below the committee's 2% objective for some time."
The Fed has kept its targeted federal funds rate at 0% to 0.25% and has said that range will be appropriate as long as the unemployment rate remains above 6.5%, and inflation between one and two years ahead is projected to be no more than a half percentage point above its 2% longer-run goal and longer-term inflation expectations continue to be well-anchored.
The committee includes the seven members of the Board of Governors and the presidents of the 12 Federal Reserve Banks and has 12 voting members. For the full FOMC Minutes and summary of economic projections, use the link.