Fed minutes reveal unease over quantitative easing programme

Julian Harris
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SEVERAL senior members of the US Federal Reserve are concerned over the risks surrounding its huge asset-buying stimulus programme, according to minutes of its September policy meeting released last night.

The Fed announced last month that it would kick off a third spell of quantitative easing (QE3) at a rate of $40bn (£24.7bn) per month, adding to the $2.3 trillion of debt already snapped up.

Yet not all policy-setters are at ease with the scheme. “Several participants reiterated their concern that additional purchases might complicate the [Federal Open Market] Committee’s efforts to withdraw monetary policy accommodation when it eventually became appropriate to do so,” the minutes said.

QE3 could raise “the risk of undesirably high inflation in the future and potentially unmooring inflation expectations,” it added.

And one hawk on the committee added that ongoing QE could “lead to excessive risk taking on the part of some investors and so undermine financial stability over time.”

Yet most of the committee agreed to back the QE3 programme.

• Initial unemployment claims in the US rose by a seasonally adjusted 4,000 last week, and demand for US factory goods crashed in August, two data sets showed yesterday.