Make us your home page
Instagram

Meeting hints at possible cracks in Fed's unity

WASHINGTON — Several Federal Reserve policymakers were concerned last month about the risks of the Fed's efforts to boost the U.S. economy by keeping borrowing costs low for the foreseeable future.

Minutes of the Fed's Jan. 29-30 policy meeting, released Wednesday, showed some officials expressed concern that continuing the Fed's monthly purchases of $85 billion in Treasurys and mortgage bonds could eventually escalate inflation, unsettle financial markets or cause the Fed to absorb losses once it begins selling its investments.

In the end, the Fed voted 11-1 last month to keep its bond-buying program open-ended and at the same size in a program intended to keep interest rates down to encourage borrowing and spending.

The lone dissenter in the Fed's vote last month to continue its current policies was Esther George, president of the Fed's Kansas City regional bank.

The January minutes suggested that the discussion over the risks from the bond purchases was more extensive than at the Fed's December meeting.

The minutes of the January meeting showed that "several participants" thought the Fed should be ready to vary the pace of its purchases as it adjusts its view of the economy or the benefits and costs of the purchases. The policymakers asked Fed staffers to provide a deeper analysis at upcoming meetings of the issues raised in the discussion.

Private economists seemed divided Wednesday over how to interpret the debate described in the Fed's minutes.

Some pointed to the Fed's lopsided 11-1 vote last month for the current level of bond purchases as a sign that chairman Ben Bernanke commands a large majority for keeping the monthly purchases at $85 billion until the job market strengthens significantly.

Other analysts said the extensive discussion of the purchases at last month's policy meeting signaled rising concern about the risks of continuing the bond-buying program.

After reading the minutes, Paul Ashworth, chief U.S. economist at Capital Economics, said he thought it was possible that the Fed will decide to scale back its purchases as early as its next meeting, March 19-20.

The Fed is on its third round of bond purchases. Unlike the previous rounds, this one is open-ended: The Fed has said it will keep buying bonds until it sees substantial improvement in the job market. It also plans to keep a key short-term interest rate at a record low at least until the unemployment rate falls below 6.5 percent. It's now 7.9 percent.

Other reports

U.S. home builders began work at a slower pace in January than in December, but all of the drop occurred in the volatile area of apartment construction, which sank 24 percent. By contrast, the rate of single-family home building rose 0.8 percent. The Commerce Department said Wednesday that builders started work at a seasonally adjusted annual rate of 890,000 homes last month. That was down 8.5 percent from December, when housing starts had hit an annual rate of 973,000, the most since June 2008.

U.S. wholesale prices rose only slightly in January after three straight declines, the latest sign that inflation is posing no threat. The Labor Department said Wednesday that its producer price index rose 0.2 percent last month, the first increase since September. Gasoline and other energy prices fell, while food prices jumped 0.7 percent after dropping sharply in December. In the past 12 months, wholesale prices have risen just 1.4 percent, down from a 4.1 percent increase for the 12 months that ended in January 2012.

Meeting hints at possible cracks in Fed's unity 02/20/13 [Last modified: Wednesday, February 20, 2013 9:54pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Home of Tampa Bay Lightning GM Steve Yzerman hits market at $3.45 million

    Real Estate

    TAMPA — The Davis Islands home of Tampa Bay Lightning General Manager Steve Yzerman is back on the market for $3.45 million after a brief hiatus.

    The Davis Islands home of Tampa Bay Lightning General Manager Steve Yzerman is on the market for $3.45 million. [Courtesy of Hi Res Media]
  2. Trigaux: Halfway through 2017, a closer look at six drivers of the Tampa Bay economy

    Business

    We're nearly halfway through 2017 already, a perfect time to step back from the daily grind of business and ask: How's Tampa Bay's economy doing?

    Is there one theme or idea that captures the Tampa Bay brand? Not really but here's one possibility. The fun-loving annual Gasparilla "Invasion" of Tampa is captured in this photo of 
The Jose Gasparilla loaded with pirates of Ye Mystic Krewe of Gasparilla on its way this past January to the Tampa Convention Center. In the future a vibrant downtown Tampa or St. Petersburg may be the better theme. [CHRIS URSO   |   Times]
  3. Will new laws protect condo owners from apartment conversions and rogue associations?

    Real Estate

    Danny Di Nicolantonio has lived in St. Petersburg's Calais Village Condominums for 33 years. Annoyed at times by the actions, or inaction, of the condo board and property managers, he has complained to the state agency that is supposed to investigate.

    That has left him even more annoyed.

    A bill passed by the Florida Legislature would affect places like The Slade in Tampa's Channelside district, where condominium owners have battled a plan to convert homes into apartments.
[Times file photo]
  4. Walmart opens first Pinellas County in-house training academy

    Retail

    Seminole — It had all the hallmarks of a typical graduation: robe-clad graduates marching in to Pomp and Circumstance, friends and family packed together under a sweltering tent and a lineup of speakers encouraging the graduates to take charge of their future.

    New Walmart Academy graduates are congratulated Thursday morning by associates during a graduation ceremony at the Walmart store, 10237 Bay Pines Boulevard, St. Petersburg. The Walmart location is one of the company's training academies where managers complete a one week retail course. David Shultz and Richard Sheehan, both from St. Petersburg, get high fives from the crowd.
[SCOTT KEELER   |   Times]

  5. Lawsuit: Florida contractor fakes death to dodge angry homeowners

    Human Interest

    SEMINOLE — For weeks, Glenn Holland, 67, crawled out of bed before the sun rose to look for a dead man.

    Last year Glenn and Judith Holland said they paid a contractor thousands of dollars to renovate their future retirement home in Seminole. But when they tried to move in on Dec. 14, they said the home was in shambles and uninhabitable. They sent a text message to contractor Marc Anthony Perez at 12:36 p.m. looking for answers. Fourteen minutes later, they got back this text: "This is Marc's daughter, dad passed away on the 7th of December in a car accident. Sorry." Turns out Perez was still alive. Now the Hollands are suing him in Pinellas-Pasco circuit court. [LARA CERRI   |   Times]