WASHINGTON - Federal Reserve policymakers took a more optimistic view of the economy last month while maintaining their dissatisfaction with job growth as they pressed forward with an expansion of record monetary stimulus.
Officials “continued to express disappointment in both the pace and the unevenness of the improvements in labor markets,” while also judging the recovery to be on a “firmer footing,” the Federal Open Market Committee said in minutes of its Jan. 25-26 meeting, released Wednesday. Policymakers raised projections for economic growth this year and made little change to forecasts after 2011 or for unemployment and inflation.
The Fed was divided over whether further evidence of a strengthening recovery would warrant slowing or reducing the $600 billion of Treasury purchases, and the report doesn’t discuss what the Fed may do after completing the bond buying. Chairman Ben Bernanke is trying to spur growth and reduce 9 percent unemployment by bringing about a “sustained period of stronger job creation,” he said this month.
“A few members noted that additional data pointing to a sufficiently strong recovery could make it appropriate to consider reducing the pace or overall size of the purchase program,” the Fed minutes said. “However, others pointed out that it was unlikely that the outlook would change by enough to substantiate any adjustments to the program before its completion.”
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While the decision was unanimous, a “few” FOMC voters “remained unsure of the likely effects of the asset purchase program on the economy, but felt that making changes to the program at this time was not appropriate.”
Central bankers projected U.S. inflation-adjusted gross domestic product would rise 3.4 percent to 3.9 percent, compared with November forecasts of 3 percent to 3.6 percent, as household spending picked up and recent economic data showed a “stronger tenor.”
The jobless rate will average 8.8 percent to 9 percent in the fourth quarter, Fed officials projected, down from November forecasts of 8.9 percent to 9.1 percent.