Fed minutes show many members favor more stimulus

The Federal Reserve in Washington, DC / Chip Somodevilla/Getty Images/File

(MoneyWatch) COMMENTARY The release Wednesday of minutes from the Federal Reserve's June meeting has buoyed expectations that further monetary stimulus is likely.

According to the minutes, "a few" members of the Federal Open Market Committee -- the central bank's policy-setting body -- "expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment."

In addition, "Several others noted that additional policy action could be warranted if the economic recovery were to lose momentum, if the downside risks to the forecast became sufficiently pronounced, or if inflation seemed likely to run persistently below the Committee's longer-run objective," according to the minutes for the meeting, which was held June 19-20.

QE3 to set sail in August?
Employment report not bad enough for Fed action
Commentary: Fed should flex its power to recharge economy

Fed policymakers also noted that they expect unemployment to remain elevated for some time at a level inconsistent with their mandate, which also increases the odds of further easing.

But the Fed also expressed caution. For example, questions were raised about "how large the Federal Reserve's asset purchases would have to be to cause a meaningful deterioration in securities market functioning, and of the potential costs of such deterioration for the economy as a whole."

So while it seems likely that the Fed will try to do more to satisfy its mandate -- unemployment is above target and inflation is below target, both of which call for more easing -- it's unlikely that the move will be as aggressive as many critics outside the Fed would like it to be.

If economic data continue to show that the recovery is stalling, or if the Fed believes that disinflation is ahead, it is likely to act. But while the Fed may go slightly beyond the bare minimum required to at least appear to be doing something, it's unlikely to surprise analysts with significantly more aggressive measures.

[Acharn]

I've been trying to figure out just what "...a meaningful deterioration in securities market functioning..." is supposed to mean. I'm sure it has something to do with "Will it cost me money? Me, personally? Or my friends? Will it mean one or more of my friends will get a lower bonus? Oh, dear, deciding is so hard." Every one of these guys should be fired, and Helicopter Ben should be charged with Contempt of Congress for lying in his confirmation testimony. They've been treating 2% inflation as terrifyingly high for four years now, when the average under Bush was 4.5%, but 8.5% unemployment is nothing to worry about.

[payasyougo]

Just do it already. Of course, each "fix" has a shorter duration before withdrawal symptoms.

[lami987]

Any stimulus must be directed directly to American consumers like provide meaningful work thus income for everyday Americans. Jobs are created only when consumers buy. Wealthy Americans or businesses cannot create job regardless of how much money they have. Politicians like Romney and other congressional leaders believe otherwise because they want to enrich their buddies in private sector. The first stimulus started by Bush and continued on by Obama did indeed enrich their buddies in the banking industries tremendously but didn't do any good towards home foreclosures and under water home owners.

[MaxK341]

Stimulus never was a valid response to an economy burdened with excessive debt; so adding more debt will not solve this economic delimmna. The problem is that the Fed is trying to manage the economy and what they are doing is preventing the needed correction that would lead to a strong recovery. We don't need Fed intervention. The economy would be better if they just get out of the way and allow it to correct.