Wednesday, April 10, 2013 6:02 pm
Minutes show Fed supports stimulus through midyear
By CHRISTOPHER S. RUGABERAP Economics Writer
But many members indicated they want to slow and eventually end the program before the end of the year, as long as the job market and economy show sustained improvement. The Fed's purchases of about $85 billion a month in Treasury and mortgage bonds are intended to lower long-term interest rates and encourage more borrowing and spending.
The minutes of the Fed's March 19-20 meeting were released at 9 a.m. EDT - five hours earlier than planned - after the Fed said it inadvertently sent them a day earlier to congressional staffers and lobbyists. The more than 100 recipients also included employees at JPMorgan Chase, Goldman Sachs Group, Wells Fargo and other large banks , according to a list of email addresses released later in the day by the Fed.
"One gets the sense that many Fed policymakers are anxious to start paring back the size of the ... purchases as soon as the data allow," Dana Saporta, an economist at Credit Suisse, said in a note to clients.
Still, a weak employment report released Friday is likely to make policymakers even more supportive of keeping the measures in place for the foreseeable future.
The report showed employers added just 88,000 net jobs last month. That was the fewest in nine months and much lower than the average of 220,000 jobs a month created from November through February.
The unemployment rate dropped to a four-year low of 7.6 percent last month. However, the rate fell only because more people stopped looking for work and were no longer counted as unemployed.
In its statement after the last meeting, the Fed said the economy had strengthened but still needed its efforts to help lower high unemployment. In addition to continuing the bond purchases, the Fed stuck by its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
The minutes indicated that many of the Fed's members want to see sustained improvement in the job market - from a wide range of economic indicators - before making any decision to reduce the pace of purchases.
Stocks rose sharply after the minutes were released. The Standard & Poor's 500 index rose 16 points to 1,585 in midday trading - above its all-time high of 1,576.09 set in October 2007. The Dow Jones industrial average climbed 119 points to 14,792.
The Fed made minutes public earlier on Wednesday after learning that about 100 congressional staffers and lobbyists received them at 2 p.m. EDT on Tuesday. They had been scheduled to be released at 2 p.m. EDT on Wednesday.
Fed spokesman David Skidmore said the Fed notified the Securities and Exchange Commission and the Commodity Futures Trading Commission about the mishap. The Fed also asked its inspector general to investigate its procedures for releasing the minutes.
"At this time we do not know if there was any trading related to the early distribution," Skidmore said. "Every indication at this time is that the early distribution of the minutes was entirely accidental."
John Nester, a spokesman for the SEC, declined to comment on the release of the minutes, beyond saying that the Fed contacted the SEC staff.
Several staff members of both the House Financial Services and Senate Banking committees were among those who received the minutes early.
The minutes showed a wide array of opinions and criteria for when to end the bond purchases, which have boosted the Fed's balance sheet to $3.2 trillion.
A few members want to end "relatively soon" the bond-purchase program. Those members say the costs likely outweigh the benefits. A few others saw the risks as increasing quickly and said the purchases would likely need to be reduced "before long."
Many members said an improved job market could lead them to slow purchases within a few months, and a few said economic conditions would likely justify continuing the program until late this year.
AP Business Writer Marcy Gordon contributed to this report.