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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!