Washington, DC, United States (4E) – The minutes of the U.S. Federal Reserve’s last meeting released Thursday showed that policymakers were divided over the duration of the central bank’s asset purchases aimed to support the economy.
At a December meeting, the Federal Open Market Committee (FOMC) decided to replace the policy of selling shorter-term government debt to buy longer-dated ones, commonly known as Operation Twist, with quantitative easing (QE) that printed new money to purchase U.S. Treasuries at a tune of $45bn beginning January this year.
Of the 10 voting members of the FOMC, all but one voted for the policy change. According to the minutes released in Washington, however, many of the policymakers reluctantly approved the shift.
The minutes said that while almost all FOMC members believed that the asset purchase program that started in September had been working, they also realized that the benefits of such policy were uncertain and could potentially harm the central bank’s balance sheets as costs continue to rise.
According to the report, “several” committee members suggested that the pace of the asset purchases could be slowed down “well before the end of 2013,” as concerns over the Fed’s financial stability and investment portfolio increases.
The committee also retained its QE program for mortgage-backed securities that allows the bank to buy $40bn of assets every month, as well as other actions that aim to encourage investment like keeping down long-term interest rates.