U.S. Federal Reserve chairman Ben BernankeJONATHAN ERNST/Reuters
Several Federal Reserve policy makers last month thought they may need to do more to help the recovery if it stumbles, but there was almost no support for extending the central bank's Operation Twist program, due to end in June.
Instead, the minutes of the Fed's meeting suggested policy makers favoured keeping policy on hold for the time being, with "some" members saying they would favour changing the Fed's current stance "only once they were more confident that the medium-term outlook or risks to the outlook had changed significantly."
St. Louis Fed president James Bullard, whose views are seen as centrist, on Wednesday echoed that view, saying he expects the Fed to keep policy on hold until there is a clear change in economic outlook.
He also warned that the main risk to policy is that the central bank over-commits to a super-loose course of action.
After their April 24-25 meeting, Fed officials said the weak economy would likely warrant keeping rates exceptionally low through late 2014.
Fed chairman Ben Bernanke at the time said U.S. monetary policy was "more or less in the right place" but the central bank would not hesitate to open the monetary spigots further "should the economy require that additional support."
That view was underscored in the minutes from the meeting, released Wednesday, which said several members of the Fed's policy-setting committee "indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough."
The Fed remained sober about economic prospects. Members said the economy had been "expanding moderately" and generally agreed the economic outlook was broadly similar to that at the time of their March meeting.
While noting that labour market conditions had improved in recent months, almost all members said they viewed unemployment as still elevated and to decline gradually, the minutes said.
Members also cited strains in global markets stemming from the banking and debt crisis in Europe, and the potential downside risks from contractionary U.S. fiscal policy.
Risks to the economy remain, data since the meeting shows. Unemployment fell in April, to 8.1 per cent, but only because people had given up looking for work.
More recently, a political crisis in Greece has sparked worries the debt-laden country could leave the European Union's common currency zone.
Still, a firming domestic housing market and signs of underlying consumer demand in the latest U.S. retail sales data have contributed to a sense that the recovery is still on track.
A lone participant in the April policy-setting meeting thought the Fed should extend its current bond-buying program, known as Operation Twist, that is due to be completed next month. That program is designed to push down long-term borrowing costs by adding to the Fed's long-term securities holdings, while selling a like amount of its shorter-term holdings.
But several Fed officials since the April meeting have said they see no need now for more easing.
Some, including policy hawks like Philadelphia Fed president Charles Plosser and Minneapolis Fed president Narayana Kocherlakota, have called for the Fed to start removing accommodation as soon as this year.
New data included with the minutes suggested there was still ample support for the current late-2014 guidance.
About half of participants in the April meeting said that exceptionally low rates would be appropriate at least until late 2014.
The moderately dovish tone of the minutes led traders to push out to July, 2014, their expectations for a first Fed rate hike, based on short-term interest-rate futures listed at the Chicago Board of Trade. Before the minutes they saw June, 2014, as the timing for the likely first rate hike.
Economists peg the chance of a third round of quantitative easing at about 30 per cent, a Reuters poll in recent days showed.