- Minutes of the Fed's Aug. 9 meeting, released Tuesday after the normal three-week lag, offered new evidence that some officials wanted to immediately restart a controversial bond-buying program aimed at spurring the economy. Others felt that even the smaller steps the central bank instead chose were too aggressive.
- Officials considered a range of actions—which included setting numerical targets for inflation and unemployment, rejiggering their holdings of Treasury securities and trying to push already-low short-term interest rates a little closer to zero, all with the purpose of boosting markets and economic growth. They also considered doing nothing.
- After the minutes were released, investors cheered the prospect of more bond-buying.
- There will likely be a vigorous debate at the coming meeting about whether the Fed should take the big step of new bond purchases—known by many as quantitative easing, or QE—or other actions. One possibility is that the Fed will keep taking small steps while it reads the economy and decides whether to restart bond buying.
- Mr. Evans is part of a contingent of Fed "doves"—officials who tend to be less worried about inflation and favor more action to boost growth and reduce unemployment. The "hawks"—who worry more about inflation and oppose more action—have received attention because they are the ones dissenting, but the minutes showed that the doves have been very vocal internally. "A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept (the measures taken) as a step in the direction of additional accommodation," the minutes said.
- Rejiggering the composition of the Fed's securities holdings could also be a half-step which wins common agreement. (this would be the "operation twist") Economic theory suggests that the Fed can push down long-term interest rates and stimulate growth by buying more long-term securities while it sells short-term securities. The Fed could twist the portfolio in this manner without adding to it, which might pacify inflation hawks who worry that the Fed's $2.8 trillion portfolio of securities, loans and other assets already is too large.