Federal Reserve policymakers clashed over the benefits and risks of launching a $600 billion program to rejuvenate the economy, but voted for it anyway, according to minutes of their closed-door deliberations released Tuesday.
Despite a near unanimous 10-1 vote in support of the program, the minutes from the Nov. 3 meeting show that some Fed officials had concerns about embarking on a second round of stimulus. The minutes also reveal that the Fed held a secret meeting in mid-October to talk about its communications strategy.
Some officials thought the additional purchases of government debt would have limited effect in revving up the economy. Some also worried about risks — unleashing inflation or causing a destabilizing slide in the value of the U.S. dollar.
In the end, Fed Chairman Ben Bernanke persuaded all but one of his colleagues to back the plan. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, was the sole dissenter.
Explaining the need for more stimulus, the Fed said that progress on its key dual mission of maximizing employment and making sure prices are on an even keel had been "disappointingly slow."
In fact, the Fed downgraded its forecasts for this year and next. Fed officials said that economic growth would be weaker and unemployment higher than previously estimated in June.
The Fed also revealed that policymakers in a separate meeting on Oct. 15 discussed ways to improve their communications with investors and the public.
At that videoconference, Fed officials talked about whether it might be useful for the Fed chief to hold occasional press briefings to provide more detailed information and insights into the Fed's thinking. No decision was made.
Fed officials also weighed at the October meeting whether the Fed needed to adopt an explicit inflation target.
Inflation has been running below the Fed's comfort zone of between 1.5 percent and 2 percent. That spurred some concern of deflation — a prolonged and dangerous drop in prices, wages and in the values of homes and stocks. Fed officials didn't adopt an explicit inflation target. Instead, they noted that such information is contained in the Fed's quarterly economic forecasts.
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