Fed Weighed More Stimulus—As Well as an Exit Strategy

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Johnny Oxygen
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Fed Weighed More Stimulus—As Well as an Exit Strategy



Some Federal Reserve officials are ready to provide more monetary policy easing if the recovery is too sluggish to cut the lofty U.S. unemployment rate and if inflation eases as expected, minutes of their June meeting released on Tuesday show.

Others disagreed and said that if recent increases in inflation do not moderate, the Fed should consider tightening policy sooner than expected.

Officials noted that investors had become more concerned about risks.

They pointed to an escalation of debt problems in Greece and other European countries, as well as uncertainty over U.S. debt repayment.

''Even a short delay in the payment of principal or interest on the Treasury Department's debt obligations would likely cause severe market disruptions and could also have a lasting effect on U.S. borrowing costs,'' the Fed minutes read.

Fed officials said they expected the economy would pick up in the second half of the year after slowing this spring. But the outlook for both employment and inflation were unusually uncertain, given the sluggish growth and a jump in energy prices this year.

The minutes cover the Fed's June 21-22 meeting. At that meeting, the central bank lowered its economic forecast but kept a pledge to leave interest rates at exceptionally low levels for an extended period.

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