WASHINGTON — Debate is intensifying at the Federal Reserve over how best to cope with a weakening recovery, with momentum growing for a concrete plan to prevent a backslide into recession.
That came into view Thursday as James Bullard, president of the Federal Reserve Bank of St. Louis, offered a specific proposal. He said the Fed should revive a crisis-era program to buy government debt if the country seems headed toward a bout with deflation.
Fed Chairman Ben Bernanke has yet to endorse precise steps, saying only that the Fed is ready to act if needed. He has mentioned possibilities while committing to none.
And one Fed official has dissented all year over the Fed’s pledge to keep interest rates at record lows, pointing to some unease inside the central bank over taking any new steps to stimulate growth.
Bernanke and his colleagues meet Aug. 10. Economists don’t think the Fed will announce new policy actions at that time, unless the economy were to seriously deteriorate before then.
However, the specific elements that should be part of a contingency plan are likely to dominate those discussions, analysts said.
Bullard, a voting member this year on the Fed’s main policy- setting committee, worries that the United States could tip into a Japaneselike bout of deflation if the economy weakens.
Deflation is a widespread and prolonged drop in prices of goods, values of homes and stocks, and wages.
