Bank of America Corp (BAC), Credit Suisse Group AG (ADR) (CS) – Fed Members: More Job Gains Needed to Taper Bond Buying

Page 1 of 2

WASHINGTON (AP) — Federal Reserve officials seem far from a consensus on the question that’s consumed investors for months: When will the Fed slow its bond purchases, which have fueled spending, supported economic growth, driven up stocks and kept mortgage rates near record lows?

Bank of America Corp (NYSE:BAC)

Minutes of their June policy meeting released today show many members felt the job market’s improvement would have to be sustained before the Fed would scale back its bond purchases. And many thought the purchases should extend into 2014, according to a summary of economic forecasts that are released with the minutes.

Still, several thought a slowdown in purchases could occur soon. And one faction favored a more aggressive timetable: About half the “participants” favored ending the bond purchases late this year — several months earlier than Chairman Ben Bernanke has indicated, according to the summary of forecasts, which is prepared before the Fed’s policy discussion.

Participants include both voting and non-voting members of the Fed’s policy committee.

The divisions revealed Wednesday by the minutes reflect the difficulty investors have had deciphering the Fed’s intentions. Bernanke has carved out a measured stance: At a news conference after last month’s meeting, he said the Fed would likely slow its bond purchases later this year and end them around mid-2014 if the economy continued to strengthen.

Most investors and analysts interpreted his remarks to mean the Fed would likely announce after its September meeting that it will scale back its bond buying.

Many Fed officials side with Bernanke’s approach. But the minutes were a reminder that some officials feel Bernanke’s timetable for slowing the bond buying is too cautious.

Some analysts think the Fed, in the end, will back the chairman’s notion of slowing the purchases later this year — if the outlook for the economy continues to strengthen.

The minutes suggest that a slowdown in the bond buying in September “is not quite a done deal,” said Michael Hanson, U.S. economist at Bank of America Corp (NYSE:BAC) Merrill Lynch. “For a taper in September, we may still need to see some more improvement in the economy.”

Yet even the analysts differ. Dana Saporta, an economist at Credit Suisse Group AG (ADR) (NYSE:CS), said she still thinks the Fed will start pulling back its purchases in September.

The jobs report for June, which was released after the Fed met last month, “went at least some way toward satisfying those who were looking for more improvement in labor market conditions,” Saporta said.

Unless the economic data significantly worsen in July and August, “it seems like most Fed officials expect tapering to begin in September,” she said.

Employers added 195,000 jobs in June, and revisions showed that another 70,000 jobs were added in the previous two months. The unemployment rate was unchanged at 7.6 percent.

Fed members also struggled at last month’s meeting over how best to convey the Fed’s thinking about its timetable for bond purchases, the minutes showed.

Some wanted to explain it in the post-meeting statement. Others felt the statement might be misinterpreted. In the end, most participants thought Bernanke should lay out the Fed’s thinking in his news conference — and stress that any pullback in bond purchases would depend on the economic outlook.

Bernanke stressed at the news conference last month that if the economy weakens, the Fed wouldn’t hesitate to step up its bond purchases again. Still, stocks and bonds plunged after his remarks, and interest rates surged.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!