WASHINGTON – Aug. 23, 2012 – Federal Reserve officials spoke with increased urgency at their last meeting about the need to provide more help for a weak U.S. economy. Many felt further support would be needed “fairly soon” unless the economy improved significantly.
The minutes of the July 31-Aug. 1 meeting don’t say what step would most likely be taken.
The boldest move would be to launch a new program of bond buying to try to lower long-term interest rates to encourage more borrowing and spending.
The minutes show many officials favored pushing the timetable for any increase in record-low short-term rates beyond the Fed’s current target of late 2014 at the earliest. Some economists think the target will be extended to mid-2015. The minutes said Fed officials agreed to defer any action on extending the timetable until their next meeting in September.
Early reaction in the stock and bond markets was positive but muted. The price of gold, which traders sometimes buy as a hedge against inflation, jumped about $10 an ounce, to $1,650, its highest since early May.
The Fed releases the minutes of its private discussions three weeks after each meeting. The policy committee will next meet Sept. 12-13.
After its August meeting, the Fed announced no changes in its policies. But in a statement afterward, it appeared to signal a growing willingness to take further steps to boost the economy if it doesn’t improve.
The issue of whether the Fed will announce any major moves in September has been thrown into doubt by economic improvements since its last meeting. Gains have been made in such areas as hiring, housing and consumer spending.
Many analysts are looking to a speech by Chairman Ben Bernanke on Aug. 31 at an annual Fed conference in Jackson Hole, Wyo., to provide more guidance on any new steps.
Many economists think the Fed will want to delay any announcement of further bond purchases until after its September meeting. The Fed has already tried to drive down long-term rates by buying more than $2 trillion in Treasury bonds and mortgage-backed securities.
© Copyright 2012 USA TODAY, a division of Gannett Co. Inc.