WASHINGTON — Federal Reserve officials stuck with the pace of their $600 billion Treasury bond-buying program last month because the economy wasn’t improving fast enough to make a noticeable dent in unemployment.
Spending by consumers and businesses improved heading into December, and Congress was on the verge of enacting a tax-cut package that would bolster the economy, Fed officials said. That made them more confident the economic recovery would gain momentum, according to minutes of the Fed’s closed-door meeting Dec. 14.
Risks still loomed, the minutes said, particularly a weak housing market and spending cuts and layoffs from state and local governments. So the Fed voted 10-1 to stick with its plan to buy the bonds through June to try to lower interest rates, spur spending and lift stock prices.
Kansas City Fed President Thomas Hoenig, the longest-serving policymaker, voted against the plan for the eighth straight time, reiterating his view that the “continued high level of monetary accommodation” may eventually “destabilize the economy.”
Still, with the economy gaining strength, the risks of deflation have “receded somewhat over recent months,” the Fed minutes said.
Bloomberg News contributed to this report.
