A couple of Federal Reserve officials backed ending the central bank’s bond-buying prior to the planned end in mid-March in order to send “an even stronger signal” of a commitment to bring down inflation, according to the minutes of the Fed’s January meeting released Wednesday.
Ultimately, the Fed decided not to adjust its asset purchase plan, now set to end around March 10.
After the strong January consumer price inflation data was released last week, markets speculated that the Fed would move to end its asset purchases more quickly, but the slow “tapering” of asset purchases remains on track as scheduled.
U.S. stocks recovered some of the sessions losses after the Fed minutes were released. The Dow Jones Industrial Average
was down almost 200 points.
Fed officials said it would soon be appropriate to start raising interest rates, the minutes confirmed. Fed Chairman Jerome Powell and his colleagues signaled a rate hike is likely to come at the March 16 meeting at his press conference at the January meeting.
Most Fed officials thought that they expect high inflation to move down, but if inflation doesn’t fall, “it would be appropriate for the Fed to remove policy accommodation at a faster pace than they currently anticipate,” the minutes said.
Minutes show that a number of Fed officials thought conditions were warranted for the Fed to start to shrink the size of its balance sheet later this year.
Fed officials said the pace and timing of balance sheet reduction would be determined at upcoming meetings and a significant reduction in the size of the balance sheet would be appropriate.