Fed Bond Purchase Option Kept in Reserve as Officials Weigh Data
21.05.12
Feb. 16 (Bloomberg) -- Federal Reserve officials are keeping open the option of a third round of bond purchases in case the economy weakens or inflation stays low.
“A few” members of the Federal Open Market Committee said economic conditions could warrant buying assets “before long,” and others indicated that action would become necessary if the “economy lost momentum” or price gains seemed likely to remain lower than the Fed’s 2 percent goal, according to minutes of their Jan. 24-25 meeting released yesterday in Washington.
Policy makers willing to wait for evidence of weakness in the economy before taking further action are probably in the majority, said Roberto Perli, a former senior staff economist in the central bank’s division of monetary affairs, which drafts the language in the Fed’s communications.
“The bottom line is there is a threshold” for asset purchases, said Perli, a managing director at International Strategy and Investment Group Inc. in Washington. “Only two or three members think we are already there. A more substantial group is open to the idea but thinks economic conditions need to get somewhat worse.”
Source: BusinessWeek
