FOMC members argue for further easing

“A few” Federal Reserve policymakers recommended the central bank consider further monetary easing, according to the Federal Open Market Committee’s (FOMC’s) latest minutes.

At its last meeting on November 1 and 2, the committee refrained from announcing any new policy moves after deciding that economic activity picked up during the third quarter, despite the persistence of some downside risks.

The minutes read: “A few members indicated that they believed the economic outlook might warrant additional policy accommodation.

“However, it was noted that any such accommodation would likely be more effective if it were provided in the context of a future communications initiative.”

The statement adds that “most of these members” agreed to maintain the Fed’s current monetary policy stance, although one dissented on the basis that additional policy easing “was warranted at this time”.

The minutes’ publication came after the US Bureau of Economic Analysis revised the third-quarter economic growth to 2%, down from its previous estimate of 2.5%.

Furthermore, the FOMC’s minutes show the committee debated changes to the Fed’s communication on interest rates, with some members suggesting that the pledge to maintain short-term rates at a record low until mid-2013 should be phrased in terms of its timespan rather than a date.

“Such language might be better to indicate a constant stance of monetary policy over time,” the members in favour of the change argued.  

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