(Reuters) - Federal Reserve officials believed in September the struggling recovery might soon need more help, and they discussed several ways to provide support, including the possible adoption of a price-level target. Policy-makers had a "sense that (more) accommodation may be appropriate before long," the central bank said on Tuesday.
In minutes of the its last policy-setting session held September 21, the Fed said officials discussed several approaches to aiding the economy but focused on buying additional longer-term Treasury securities and ways to nudge the public into expecting higher levels of inflation in the future.To help shift inflation expectations, policy-makers debated providing more detailed information about what rates of inflation they would prefer, or the possibility of making clear they would tolerate a higher level of inflation on a temporary basis, a policy approach known as price-level targeting.
They also discussed the possibility of targeting a path for GDP growth.
The September meeting's minutes showed a number of Fed officials were close to pulling the trigger. "Many members considered the recent and anticipated progress toward meeting the committee's mandate of maximum employment and price stability to be unsatisfactory," the Fed said. Several officials felt that unless conditions improved, they would consider it appropriate to take action soon in hopes of spurring a stronger recovery.
This could be a set up for QE2, but recent comments (see earlier post) might contradict the message. Always take new comments versus prior comments. Stocks lift on QEHope. Myopic.
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