WASHINGTON – Federal Reserve officials in their last meeting discussed a “number of policy tools” that the central bank might use to further stimulate the economy in the face of the weakening recovery, an official account released on Wednesday said, but they remained in wait-and-see mode.
“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” the account of the meeting that ended Aug. 1 said.
With few signs of a substantial and sustainable strengthening evident this summer, the report will likely solidify investors’ expectations that the bank will take new measures this fall.
The participants in the meeting discussed a number of options to give more support to the economy, the minutes said. Those include keeping the federal funds rate near zero for a longer period than currently indicated. The Fed has said it will keep that rate low through 2014.
“It was noted that such an extension might be particularly effective if done in conjunction with a statement indicating that a highly accommodative stance of monetary policy was likely to be maintained even as the recovery progressed,” the meeting notes said.
“A few” members suggested “replacing the calendar date with guidance that was linked more directly” to the economy, or removing any guidance as to when the rate would increase.
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