US Federal Reserve policymakers were divided over how long the central bank should continue asset purchases to support the economy, the minutes of their last meeting showed Thursday.
The Federal Open Market Committee, at a December meeting, approved open-ended quantitative easing, but some thought the purchases should continue until the end of 2013 while others thought they should end sooner, according to the minutes.
The FOMC agreed at the meeting to launch a new, open-ended $45 billion a month program of buying longer-term Treasury securities to replace the bond-swap Operation Twist program that was to expire at year-end.
The panel also continued its QE program for mortgage-backed securities at a pace of $40 billion per month, as well as other measures aimed at pushing down long-term interest rates to encourage investment.
The minutes of the December 11-12 meeting highlighted the climate of uncertainty the central bankers saw in the economy and about the effectiveness of their policies.
“While almost all members thought that the asset purchase program begun in September had been effective and supportive of growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the balance sheet increased,” the minutes said.
A few of the FOMC members indicated that ongoing asset purchases would likely be needed until about the end of 2013, while a few others did not set a specific timeframe or total for purchases.
“Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet,” the minutes said.
One member viewed any additional purchases as “unwarranted.” - Sapa-AFP