This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fed Officials Made "close Call" On Bond Buys

By MARTIN CRUTSINGER

WASHINGTON (AP) â¿¿ Nearly every member of the Federal Reserve thought last month that the central bank should see more evidence that the economy was improving before slowing its bond purchases. But worries about whether a delay would confuse financial markets made the decision a "close call."

Minutes of the Fed's Sept. 17-18 meetings released Wednesday show that the Fed wrestled with the decision, even though the panel ended up voting 9-1 to keep the purchases at the current level of $85 billion a month. The bond purchases are intended to keep long-term interest rates low to encourage more borrowing and spending.

According to the minutes, all members but one wanted to see more data before reducing the purchases. And several noted potential risks to the economy, including a job market that had weakened over the summer, higher interest rates and a looming budget impasse in Washington.

Still, some raised concerns that inaction would undermine the Fed's ability to communicate its next steps. Many economists had predicted some reduction in the purchases. And some Fed members made comments ahead of the meeting that suggested such a move was likely.

"For several members, the various considerations made the decision to maintain an unchanged pace of asset purchases at this meeting a relatively close call," the minutes stated.

Most members indicated that they could still reduce the purchases later this year and end them next year, based on a summary of their economic projections. But those forecasts were made before the budget impasse led to a partial government shutdown this month. Many economists now believe the Fed will continue the current level of bond purchases into next year.

The Fed released the minutes shortly before President Barack Obama was to formally nominate Janet Yellen, the Federal Reserve's vice chair, to replace Ben Bernanke as chairman. If confirmed by the Senate, Yellen would take over at a critical time for the economy and the Fed's policies.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs