WASHINGTON (1/4/13)--How long the Federal Reserve will continue its bond buying programs was discussed during the Dec. 11-12 meeting of its monetary policymaking body, the Federal Open Market Committee (FOMC).
The committee is divided on the actual timeline, but most of its members indicated that the program likely would be warranted until about the end of the year, said the FOMC minutes for the meeting. The minutes were released by the Fed Thursday afternoon.
"In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases," said the minutes.
Several others, said the document, "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. One member viewed any additional purchases as unwarranted."
The minutes also indicated that officials believed the program so far had been "effective and supportive of growth," but that "they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the [Fed's] balance sheet increased."
The asset buying program includes purchasing $40 billion a month in mortgage backed securities and $45 billion a month of longer-term Treasury securities to add to the Fed's asset portfolio, said the minutes. The FOMC also maintained its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS into agency MBS, and decided to resume in January rolling over maturing Treasury securities at auction.
For the full report, use the resource link.