Most Fed officials see little reason to change course at next policy meeting
Federal Reserve officials are likely to continue their easy-money policies when they gather this week to weigh a mixed economic outlook and a recent run of low inflation.
The Fed has said it would maintain its $85 billion bond-buying programs, aimed at boosting the economy by lowering long-term interest rates, until it sees substantial progress in labor markets. It has also said it would keep short-term interest rates near zero until the jobless rate drops to at least 6.5%, as long as inflation remains steady.
With the jobless rate at 7.8% in December and inflation up 1.4% in November from a year earlier—below the Fed’s 2% target—most officials see little reason to change course at their policy meeting Tuesday and Wednesday, according to their public comments and interviews.
“I anticipate that continued purchases of mortgage-backed securities and longer-term Treasury securities will be needed well into the second half of 2013,” John Williams, president of the Federal Reserve Bank of San Francisco said in a speech earlier this month.
Not all Fed officials agree with the stance. That means arguments are likely to surface at Fed policy meetings about how long to continue buying bonds. Signs of this tension emerged in minutes of the Fed’s December meeting that showed some officials favored ending the bond-buying programs by midyear or sooner, while others thought they should probably continue through this year.
