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FOMC Minutes Show Debate On Tapering Off QE

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WASHINGTON (4/11/13)--Federal Reserve policymakers debated when to begin winding down its quantitative easing bond-buying program during the Federal Open Market Committee's (FOMC) last meeting on March 19-20, according to the FOMC Minutes of the meeting.

Some members said the Fed should begin winding down the program, in which the Fed buys back $85 billion in mortgage-backed securities each month, in mid-year and end it by the end of 2013.

The minutes, usually released at 2 p.m. ET three weeks after the FOMC meeting, were released five hours earlier than usual because they were mistakenly sent Tuesday to congressional staff and trade organizations (Bloomberg.com and The Wall Street Journal April 10).

Members saw the economic outlook for the period ahead "as little changed since the previous meeting, and, consequently, all but one member judged that a highly accommodative stance of monetary policy was warranted in order to foster a stronger economic recovery  in a context of price stability," the minutes reported.

"Many participants, including some of those who were focused on the increasing risks (of continuing the asset purchase program), expressed the view that continued solid improvement in the outlook for the labor market could prompt the committee to slow the pace of purchases beginning  at some point over the next several meetings, while a few participants suggested that economic conditions would likely justify continuing the program at its current pace at least until late in the year," said the minutes.

Members expressed a "range of views about the economic and labor market conditions that would call for an adjustment in the pace of purchases," said the minutes. "Many participants emphasized that any decision to reduce the pace of purchases should reflect both an improvement in their overall outlook for labor market conditions, as implied by a wide range of available indicators, and their confidence in the sustainability of that improvement."

"A couple of these participants noted that if progress toward the committee's economic goals were not maintained, the pace of purchases might appropriately be increased. A number of participants suggested that the committee could change the mix of its policy tools if necessary to increase or maintain overall accommodation, including potentially adjusting its forward guidance or its balance sheet policies," the minutes said.

The next FOMC meeting will be April 30 to May 1.

For the full minutes, use the link.