WASHINGTON, Jan. 8 (Xinhua) -- U.S. Federal Reserve officials were largely in agreement on the decision to begin scaling back the massive bond-buying program as they predicted continuing economic recovery and labor market improvement, minutes of its latest policy meeting showed Wednesday.
"Most members agreed that the cumulative improvement in labor market conditions and the likelihood that the improvement would be sustained indicated that the Committee could appropriately begin to slow the pace of its asset purchases at this meeting," the Fed said in the minutes released Wednesday for a Federal Open Market Committee (FOMC) meeting held on Dec. 17-18.
Some expressed concern about the potential for an unintended tightening of financial conditions if a reduction in the pace of asset purchases was misinterpreted as signaling that the Fed was likely to withdraw policy accommodation more quickly than had been anticipated.
Many Fed officials judged that the central bank should proceed cautiously in taking its first action to reduce the pace of asset purchases and should indicate that further reductions would be undertaken in "measured steps."
There was also a discussion of enhancing forward guidance about the short-term interest rates.
While some suggested that lowering the unemployment threshold from 6.5 percent to 6 percent could effectively convey the Fed's intention to keep rates low for an extended period, most FOMC members agreed to make no change and instead preferred to underscore that the ultra-low interest rates would be maintained " well past the time that the unemployment rate declines below 6.5 percent," if inflation projection remains stable.
Low inflation was also a concern at the meeting, as many saw a need to monitor inflation developments carefully for evidence that inflation, which has been running persistently below the 2 percent target, would move back to the Fed's long-term objective.
The Fed announced in a statement after its December meeting that it would start in January to taper its purchases of Treasury and mortgage-backed securities to a pace of 75 billion dollars a month from 85 billion dollars a month.
The Fed's decision "to modestly reduce the pace of asset purchases at its December meeting did not indicate any diminution of its commitment to maintain a highly accommodative monetary policy for as long as needed," outgoing Fed Chairman Ben Bernanke said earlier this month. "It reflected the progress we have made toward our goal of substantial improvement in the labor market outlook."
Bernanke's second four-year term expires on Jan. 31. He will be succeeded by Janet Yellen, who has been the Fed's vice chair since 2010 and will become the first woman to lead the institution in its 100-year history.
Before that, the Fed will hold its next policy meeting on Jan. 29-30.