WASHINGTON — Federal Reserve officials agreed at a meeting in June that unemployment would remain elevated for another five to six years, but most did not regard that as a reason for the Fed to expand its efforts to stimulate growth, according to an official account published Wednesday.
The account said that “a few” of the 12 officials who vote on Fed policy thought further measures, like bond purchases, “likely would be necessary to promote satisfactory growth.” It added that several other officials were willing to consider such measures if economic conditions took a turn for the worse.
The Fed expected slow growth this year, but the account of the June meeting — released by the central bank after a standard three-week delay — suggested that officials were disappointed by recent economic data. Several officials said that “a variety of indicators showed smaller gains than had been anticipated.”
They also remained concerned about the potential fallout from a crisis in Europe, which the account identified as the primary risk to near-term growth.
The officials decided at the meeting, held June 19 and 20, to continue a modest asset purchase program until the end of the year. The account said that Fed officials judged the purchases “would put some downward pressure on longer-term interest rates and help make broader financial conditions more accommodative.”
There were also indications that Fed officials were worried that inflation was slowing. The central bank regards a 2 percent annual pace of inflation as healthy.
The account said that more members of the committee expressed concern about that possibility in June than at the previous meeting, in April.
Some Fed officials opposed additional action because they were concerned that it would raise the pace of inflation. They saw evidence that the unemployment rate cannot quickly return to normal levels because many people looking for jobs lack the skills sought by companies looking for workers. On this view, efforts to increase growth would simply raise wages and prices, without reducing unemployment.
Some officials also have expressed doubt about the capacity of additional asset purchases to meaningfully improve conditions for employers, noting that the central bank already has pushed interest rates to very low levels.
But neither the account released Wednesday nor other public statements by Fed officials made clear whether these views commanded a majority of the policy-making committee, or whether other factors were determinate.
In the three weeks since the meeting, Fed officials have continued to seek clarity about the health of the economy.
The government reported last week that the economy added 80,000 jobs in June, and that the unemployment rate remained at 8.2 percent. Those numbers were in line with the Fed’s prediction, but were not nearly fast enough to meet its stated objective of continuing declines in unemployment.
The rate of inflation also has continued to moderate, falling well below the Fed’s preferred pace of 2 percent annual growth.
“We are falling short on both our employment and price stability mandates, and I expect that we will make only very limited progress toward these goals over the next year,” John Williams, president of the Federal Reserve Bank of San Francisco, said in a speech Monday in Coeur d’Alene, Idaho.
Mr. Williams, a moderate member of the Fed’s policy-making committee, said that he was ready to consider a new round of asset purchases, and that any such purchases should include mortgage securities.
Two other regional Fed presidents who do not hold votes on the committee — Eric S. Rosengren of the Federal Reserve Bank of Boston, and Charles Evans of the Federal Reserve Bank of Chicago — have called publicly for the Fed to expand its efforts.
The Fed’s chairman, Ben S. Bernanke, may clarify his own views when he testifies before Congress next Tuesday and Wednesday.
No comments:
Post a Comment