NEW YORK (

TheStreet

) -- The Federal Open Market Committee did not uniformly agree about what steps the government should take to provide further support for the U.S. economy if it should weaken further.

The FOMC, the Federal Reserve's policy-setting arm, released minutes Tuesday from its Aug. 10 meeting. Several officials thought the central bank should take additional steps, while a few advised against actions to reinvest cash from maturing mortgage debt into Treasuries.

According to the minutes, most committee members thought "it would be better to reinvest in longer-term Treasury securities than in MBS."

"While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS might become desirable if conditions were to change."

Others cautioned that "reinvesting principal from agency debt and MBS in Treasury securities could send an inappropriate signal to investors about the Committee's readiness to resume large-scale asset purchases."

One argued that reinvesting those repayments would effectually postpone a reduction in the size of the Fed's balance sheet, and "was likely to complicate the eventual exit from the period of exceptionally accommodative monetary policy and could have adverse macroeconomic consequences in future years."

Speaking at the annual Federal Reserve symposium in Jackson Hole, Wy. Friday morning, Federal Reserve Chairman Ben Bernanke conceded that "in many countries, including the United States and most other advanced industrial nations, growth during the past year has been too slow and joblessness remains too high."

>>Bernanke: Recovery Slower Than Expected

Bernanke indicated the Fed may implement large purchases of longer-term debts if needed to prevent the economy from falling further. "I believe that additional purchases of longer-term securities, should the

Federal Open Market Committee choose to take them, would be effective in further easing financial conditions," he said.

Bernanke said deflation was "not a significant risk for the United States at this time," and that "the FOMC will strongly resist deviations from price stability in the downward direction."

"Stronger household finances, rising incomes, and some easing of credit conditions will provide the basis for more-rapid growth in household spending next year," he said.

"Bernanke fulfilled his fatherly role to the markets, saying things are tough, but they're not that bad," said Robert Pavlik, chief market strategist at Banyan Partners. "And he said if things get worse, 'I've got some ideas. I've got some ways to address the market.'"

"He's telling us what we want to hear.

The economy is not the greatest, but it's not the worst. When you read the summary of

Bernanke's speech

, it's not that great. But read the whole thing, and it's not that bad," Pavlik said.

Investors were eager to hear the chairman's outlook on the economy in light of a roster of mixed and often disappointing economic data recently released -- particularly in the

housing market

. Market watchers were also hoping the chairman would address whether he believes the recovery remains intact and what policy tools can be used to bolster the economy.

The U.S. economy is still in a soft patch but a double-dip recession is unlikely, St. Louis Federal Reserve Chairman James Bullard said in appearance on

CNBC

Friday morning. He said we're in a difficult period for formulation monetary policy and that the recovery has gone "reasonably well" until it slowed down this spring given the severity of the shock of the financial crisis in 2008.

Bullard said the Fed is contemplating more quantitative easing measures, but any new programs should be disciplined.

Bullard said the economic outlook is still positive overall, and will continue to pick up in the second half of this year and into 2011. Even so, he conceded that the economy is currently softer than the Fed had expected it to be.

Gross domestic product in the second quarter was downwardly revised to 1.6%

, the Department of Commerce reported early Friday, from a previous reading of 2.4%. Despite the revision, the economic growth rate managed to top economists' expectations for a pace of 1.4%.

The University of Michigan said its index of consumer sentiment for August came in at a final reading of 68.9, from a prior reading of 69.6, disappointing economists who expected the figure to be flat.

In the still-struggling housing sector, data released last week showed

sales of newly built homes fell 12.4% in July

to a new record-low rate, while

existing home sales plummeted 27.2%

last month. Both sets of data came in far worse than expected.

The S&P/Case-Shiller 20-city index of national home prices rose higher-than-expected in the second quarter, according to data released early Tuesday.

Nationwide home prices rose 4.4% in the second quarter

, after a 2.8% drop in the first quarter. A

federal tax credit for homebuyers of up to $8,000 is largely credited with strengthening home sales

this past spring as buyers rushed to push up their purchases before the credits expired April 30.

Record-low and near-record-low

mortgage rates

have failed to spark demand for housing in recent months, but clearly had an effect on homeowners looking to lower their monthly payments.

Mortgage applications rose 4.9%

in the week ended Aug 20, the Mortgage Bankers Association said Wednesday. Refi applications accounted for 82.4% of all applications last week, up from

81.4% in the prior week

, and the highest share observed since January 2009.

The average rate on a 30-year fixed mortgage fell to 4.55% last week, the MBA said. It was the lowest rate ever recorded in the survey,

falling from 4.6% in the prior week

.

>> Mortgage Applications Rise on Refi

-- Written by Miriam Marcus Reimer in New York.

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