The News Courier in Athens, Alabama

State and Nation

July 10, 2013

Minutes of Fed policy meeting show sharp divisions

— WASHINGTON (AP) — Federal Reserve officials seem far from a consensus on the question that's consumed investors for months: When will the Fed slow its bond purchases?

Minutes of their June 18-19 policy meeting show many of the 19 officials felt the job market's gains would have to be sustained before the Fed would scale back its bond purchases, which have helped support spending and growth, lifted stocks and kept mortgage rates near record lows.

Many thought the purchases should extend into 2014, according to a summary of economic forecasts that are released with the minutes.

Still, several thought a slowdown in purchases could start soon.

And one faction backed an aggressive timetable: According to a summary of economic forecasts released with the minutes, about half the "participants" favored ending the bond purchases late this year — months earlier than Chairman Ben Bernanke has indicated. Participants include voting and non-voting officials on the Fed's policy committee.

The divisions revealed Wednesday reflect the difficulty investors have had deciphering the Fed's intentions. Bernanke has carved out a measured stance: At a news conference last month, he said the Fed would likely slow its bond purchases later this year and end them around mid-2014 if the economy continued to strengthen. The Fed has been buying $85 billion in Treasury and mortgage bonds each month since late last year.

Most investors and analysts interpreted Bernanke's remarks to mean the Fed would likely announce after its September meeting that it will scale back its bond buying.

Many Fed officials favor Bernanke's approach. But the minutes were a reminder that some officials feel Bernanke's timetable for slowing the bond buying is too cautious.

Late Wednesday afternoon, Bernanke said the economy still needs support from the Fed's low-rate policies. Speaking in Cambridge, Mass., to the National Bureau of Economic Research, Bernanke noted that unemployment remains high and that higher taxes and federal spending cuts are weighing on growth.

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