The Federal Reserve is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes from the US central bank's latest meeting suggested.
While the 31 July-1 August meeting occurred before some encouraging economic data, including a stronger-than-expected rise in July payrolls, policymakers were pretty categorical about their dissatisfaction with the outlook, according to the minutes released last night.
"Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery," the Fed said.
Wall Street stocks erased most losses after the Fed released the minutes. Treasury bond prices, which have been under pressure from stronger economic figures, extended gains. The dollar fell and the euro surged to a seven-week high against the greenback at the prospect of the Fed providing more stimulus.
The Dow Jones industrial average closed down 30.82 points at 13,172.76, although well above its session low, but the broader S&P 500 Index clawed back from losses to end 0.32 points higher at 1,413.49.
"Certainly these minutes are dovish and will revive hopes for increased Fed easing," said David Sloan, economist at 4Cast Ltd. "We have seen some improvement in the data recently, but whether it is enough to qualify as a significant upturn is unclear."
City A.M. Reporter