The Federal Reserve stands ready to act if the sluggish U.S. economy takes a significant turn for the worse, the minutes of November's meeting of the Federal Reserve said Tuesday.
The Fed debated whether to have specific targets for inflation and unemployment, before deciding it would not be advisable to make such a change under present circumstances.
"Many participants pointed to the merits of specifying an explicit longer-run inflation goal, but it was noted that such a step could be misperceived as placing greater weight on price stability than on maximum employment; consequently, some suggested that a numerical inflation goal would need to be set forth within a context that clearly underscored the Committee's commitment to fostering both parts of its dual mandate," the minutes say.
The minutes revealed a division of opinion within the Fed about whether further easing of monetary policy is appropriate. Some members wanted to discuss a third round of quantitative easing, while other warned that keeping interest rates too low for too long risks runaway inflation.
There were no policy changes announced at the two-day meeting ending November 2, with Chairman Ben Bernanke and company holding off on another round of quantitative easing.
Instead, policy makers kept its benchmark interest rate near zero, taking a wait-and-see approach amid the simmering sovereign debt crisis in Europe. Charles Evans of the Chicago Fed was the lone dissenting vote, on grounds that further asset purchases were warranted given the gloomy economic outlook.
Unless the European crisis intensifies, the nation's economy will pick up at an anemic rate next year before a more robust recovery takes hold in 2013, according to policy makers.
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