At least seven of the 17 top Federal Reserve officials at the U.S. central bank's August meeting had reservations about the decision to buy more Treasuries, the Wall Street Journal reported.
In a significant policy shift, the Fed announced at its Aug. 10 policy meeting that it would begin using the proceeds from maturing mortgage securities in its portfolio to buy Treasury notes, an effort to prevent monetary conditions from slowly tightening over time.
The formal vote at the meeting — 9 to 1 in favor — disguised the extent of the disagreement, the Journal said, citing people familiar with the discussion.
While the meetings are attended by all 12 regional Fed presidents and five Washington-based governors, only five Fed presidents have a vote at any one time.
Governor Kevin Warsh worried a decision to reinvest mortgage proceeds into Treasuries would confuse investors and lead many to believe the Fed was paving the way to resume major purchases before it had decided to do so, the newspaper said.
Richard Fisher, president of the Dallas Fed, and others expressed concern that Fed moves might be ineffective, while Philadelphia Fed President Charles Plosser judged the action as premature, the Journal said.
The extended debate about how best to counter the slowing U.S. economy was eventually settled by Fed Chairman Ben Bernanke, who pushed successfully to proceed with the move.
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