There were a few members that “felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept the stronger forward guidance.” The FOMC discussed other possible policy options as well.
- Extending the average maturity of current holdings by selling shorter dated bonds and buying longer dated bonds would have an effect similar to another round of purchases.
- Lowering the interest rate on excess reserves from its current level of 0.25% would likely have little effect on the economy.
- A minority of Fed officials believe that none of the tools would likely do much to boost the economy.
Fed officials were downbeat on the economy, reducing growth forecasts for the second half of 2011 and for 2012 “notably.” Furthermore “many participants also saw an increase in the downside risks to economic growth.”
See the minutes.