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FOMC Minutes: After Twist, a New Purchase Program

WASHINGTON — With the economic situation continuing to generate mixed news, the Federal Open Market Committee agreed to hold the highly accommodative course steady for the immediate future but prepared for a new easing next year, according to the minutes of the committee's Oct. 23-24 meeting, released Wednesday.

"Members viewed the information on U.S. economic activity received over the intermeeting period as suggesting that the economy was, on balance, expanding moderately, with a pickup in household spending and further improvement in housing markets offset to some extent by a slowdown in the business sector," according to the minutes. "Inflation rose recently because of a temporary run-up in energy prices. However, longer-term inflation expectations were stable."

The FOMC members largely agreed that the forward guidance instituted at the September meeting recommending a "highly accommodative" monetary policy through at least mid-2015 had effectively communicated the committee's intentions. All but one member agreed that the same policies, including its extension of "Operation Twist" and its newer MBS purchase program, remained appropriate.

The committee also indicated that further easing would likely occur at the expiration of Operation Twist.

"Looking ahead, a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labor market," the minutes state.

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