WASHINGTON — Nearly every member of the Federal Reserve thought last month that the central bank should see more evidence that the economy was improving before slowing its bond purchases. But worries about whether a delay would confuse financial markets made the decision a “close call.”
Minutes of the Fed’s Sept. 17-18 meetings released Wednesday show that the Fed wrestled with the decision, even though the panel ended up voting 9-1 to keep the purchases at the current level of $85 billion a month. The bond purchases are intended to keep long-term interest rates low to encourage more borrowing and spending.
According to the minutes, all members but one wanted to see more data before reducing the purchases. And several noted potential risks to the economy, including a job market that had weakened over the summer, higher interest rates and a looming budget impasse.
Still, some raised concerns that inaction would undermine the Fed’s ability to communicate its next steps. Many economists had predicted some reduction in the purchases. And some Fed members made comments ahead of the meeting that suggested such a move was likely.
“For several members, the various considerations made the decision to maintain an unchanged pace of asset purchases at this meeting a relatively close call,” the minutes stated.
Most members indicated that they could still reduce the purchases later this year and end them next year. But those forecasts were made before the budget impasse led to a partial government shutdown this month. Many economists now believe the Fed will continue the current level of bond purchases into next year.