Fed sees “fairly high” bar for stopping bond buys


The Federal Reserve felt at its December meeting that the U.S. economy still needed help despite signs of strength, according to minutes released on Tuesday that showed little appetite to trim bond-buying plans.

Some Fed officials indicated a “fairly high” threshold for reconsidering the $600 billion in purchases first announced back in November, while others thought more time was needed before any such re-evaluation.

The rather dovish tone of the minutes suggested anyone thinking the central bank might curtail its controversial bond-buying plans, known in the markets as the second round of quantitative easing or QE2, may be getting ahead of themselves.

“There is no indication that members are inclined to curtail the program,” said Eric Green, chief economist at TD Securities. “The Fed will follow through with the $600 billion.”

Indeed, the December 14 meeting minutes noted that “members generally felt that the change in the outlook was not sufficient to warrant any adjustments to the asset-purchase program.”

Wall Street economists have been busy revising up their forecasts for economic growth in recent weeks on data showing business activity and consumer spending picking up steam.

But the Fed’s policy-setting panel was much less sanguine.