Fed policy makers split on asset purchases

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WASHINGTON, Feb. 20 (UPI) -- The U.S. Federal Reserve revealed Wednesday that there were a variety of opinions on its policy committee concerning its $85 billion per month asset purchases.

"Several participants," the Fed said in minutes of its late January Open Market Committee meeting, "emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved."

The minutes said "a number of participants," said the Fed might be better "to taper or end its purchases before it is judged that a substantial improvement for the labor market had occurred."

The Fed had previously said that its monetary policy would most likely remain intact until the unemployment rate dropped to 6.5 percent. The unemployment rate is currently at 7.9 percent.

"Several others argued that the potential costs of reducing or ending asset purchases too soon were also significant," the minutes said.

The disagreement among committee members goes full circle, the minutes revealed, as "a few participants noted examples of past instances in which policy makers had prematurely removed accommodation, with adverse effects on economic growth."

The central bank has been purchasing treasury notes and mortgage-backed securities in an effort to keep interest rates low, which may allow businesses to expand.