WASHINGTON, Oct. 4 (Xinhua) -- Policy makers at the U.S. Federal Reserve viewed the potential risks associated with the bond purchasing program as manageable and its open-ended manner as flexible, the central bank's policy meeting minutes showed on Thursday.
"Most participants thought these risks could be managed since the Committee could make adjustments to its purchases, as needed, in response to economic developments or to changes in its assessment of their efficacy and costs," the Fed noted in minutes released on Wednesday for a Federal Open Market Committee (FOMC) meeting held from September 12 to 13.
During the meeting, officials of the Fed policy-making committee exchanged views on the likely benefits and costs of another round of quantitative easing program. Some highlighted the uncertainty about the overall effects while a few expressed skepticism that such a program could help spur the economy which they saw as held by structural issues. The possible adverse effects of large purchases on market functioning were also noted.
The participants also discussed the effectiveness of purchase of Treasury securities relative to purchase of agency mortgage- backed securities (MBS) in easing financial condition.
"Some participants suggested that, all else being equal, MBS purchases could be preferable because they would more directly support the housing sector, which remains weak but has shown some signs of improvement of late," according to the minutes.
Many participants argued the bond-buying program would "provide support to the economic recovery" by putting downward pressure on longer-term interest rates and promoting more accommodative financial conditions.
The Fed launched the third round of quantitative easing, dubbed QE3, after the September meeting. It planned to buy 40 billion dollars of mortgage bonds per month until it sees substantial improvement in the job market.
Minutes showed that the central bank viewed the open-ended approach as "flexible" to allow it "to tailor its policy response over time."
The Fed said in its statement following the latest meeting that it would closely monitor incoming information on economic and financial developments in coming months, and that if the outlook for the labor market does not improve substantially, the Fed would continue its purchase of MBS, undertake additional asset purchase, and employ other policy tools as appropriate until such improvement is achieved in a context of price stability.
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