Several Federal Reserve officials said the central bank should begin tapering its quantitative easing program later this year and stop it by year end, minutes of their March meeting showed.
Bloomberg reported that the Federal Open Market Committee (FOMC) members “thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end,” according to the record of the March 19-20 FOMC meeting released today in Washington ahead of the regularly scheduled 2 p.m. time.
Fed officials, who met before a Labor Department report last week showed payroll growth in March was the slowest in nine months, debated how and when to curtail asset purchases that have swollen its balance sheet to a record $3.22 trillion. The committee, led by Chairman Ben S. Bernanke, decided at the gathering to press on with $85 billion in monthly bond buying until the labor-market outlook has “improved substantially.”
“Clearly the Fed was contemplating the timing of a tapering in asset purchases,” said Nathan Sheets, former international-finance director at the Fed and now global head of international economics at Citigroup Inc. in New York. “But my feeling is the last week’s employment report has put such discussions on hold. They must now be in wait-and-see mode to see what happens with the labor market.”
The Fed meeting was held before the Labor Department’s jobs report showed the economy added 88,000 jobs in March, less than the most pessimistic forecast in a Bloomberg survey. A shrinking labor force helped reduce the unemployment rate to a four-year low of 7.6 percent.