Economic indicators point to a slowing recovery and stalling output and employment in the minutes of the Federal Open Market Committee’s Aug. 10 meeting.
Committee members expect the recovery to gain strength next year, according to the minutes released Tuesday.
They decided “it would be better to reinvest” principal repayments received on mortgage-backed securities or maturing agency debt in longer-term
Treasury securities.
However, some committee members “worried that reinvesting principal from agency debt and MBS in Treasury securities could send an inappropriate signal to investors about the committee’s readiness to resume large-scale asset purchases.”
Some Fed policymakers emphasized that while developing and testing instruments “to facilitate an eventual exit from the period of unusually accommodative monetary policy, the committee would need to consider steps it could take to provide additional policy stimulus if the outlook” weakens appreciably.
