Fed policy makers discussed possibility of more monetary stimulus at last meeting

Members of the FOMC decided “in light of the considerable uncertainty about the current trajectory for the economy” to gather “further information before reaching a decision about providing additional monetary stimulus,” according to the minutes. 

A weak jobs report for September has been expected to spur the Fed into providing additional monetary stimulus, a decision that will likely be made at the central bankers’ next meeting, Nov. 2-3. That’s when they will probably decide to start buying up more government debt. 

The central bank last made economic projections in June and will revise their forecasts next month. Federal Reserve Chairman Ben Bernanke is scheduled to speak Oct. 15 in Boston on monetary policy.

“Elevated uncertainty about employment prospects continued to weigh on consumption spending. Many businesses had built up large reserves of cash, in part by issuing long-term debt, but were refraining from adding workers or expanding plants and equipment,” the minutes said. 

In addition, policy makers noted that “households were continuing efforts to repair their balance sheets by saving more and paying down debt” rather than spending. 

Officials said businesses also “indicated that concerns about actual and anticipated demand were important factors limiting investment and hiring.”

Participants noted that the housing sector, including residential construction and home sales, continued to be very weak. 

Central bankers lowered their projection for the increase in real economic activity over the second half of 2010 at the September meeting. They also reduced slightly its forecast of growth next year but continued to anticipate a “moderate strengthening of the expansion in 2011 as well as a further pickup in economic growth in 2012.”