Federal Reserve officials felt last month they should be ready to consider additional steps to boost the U.S. economy if an already softening outlook took a noticeable turn for the worse.
"As a result of the change in financial conditions, most participants revised down slightly their outlook for economic growth," minutes of the June 22-23 meeting of the Fed's policy panel released on Wednesday said.
"The committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," they said.
At the same time, the Fed should continue to test ways to withdraw some of the massive amounts of credit it has pumped into the financial system, officials at the central bank agreed.
Fed officials trimmed their forecasts for growth this year to a range of between 3 percent and 3.5 percent from the 3.2 percent to 3.7 percent they projected in May.
They see the unemployment rate, which stood at 9.5 percent in June, averaging about 9.2 percent to 9.5 percent in the fourth quarter, little changed from their previous quarterly forecast.
Yields for the 30-year Treasury bond fell on the news as investors ratcheted back expectations for a tightening in U.S. monetary policy next year.
"It suggests that rates are going to stay low for a long time and if necessary the Fed will try to conjure up some other ways to support the economy," Ward McCarthy, chief financial economist at Jefferies & Co. in New York, said of the minutes.
The Fed had struck a cautious tone about the economy in a statement it issued after its June meeting, saying only that the recovery is "proceeding." It renewed its promise to hold benchmark rates, which are near zero, at exceptionally low levels for an extended period.
The minutes showed Fed officials also revised down modestly their outlook for inflation. Some participants in the meeting saw risks that inflation might slide lower, and a few were worried about a dangerous deflationary spiral.
The minutes revealed that the Fed in general saw the flagging of the recovery as modest enough not to call for any additional easing beyond what is already in place.
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