Federal Reserve officials in August believed risks to the U.S. economy had eased considerably but thought low interest rates would be needed for an extended period to bolster what would likely be at best a modest recovery, documents released on Wednesday showed.
With a sluggish rebound likely, the Fed decided that neither expansion nor contraction of its asset purchases was warranted, minutes of their August 11-12 meeting made public on Wednesday said.
Policy-makers discussed adding adjustable rate mortgages to those eligible for purchases under the program, the minutes showed. Some held the view that tapering off purchases of mortgage-related debt could be helpful as those programs neared completion. No decision was made in either case.
The Fed said at its last meeting the economy was showing signs of leveling out two years after the onset of the deepest financial crisis in decades and moved to phase out one of its emergency measures.
The central bank kept its benchmark short-term interest rate steady near zero and said it would likely stay there for an extended period to guide the recovery.
The Fed signaled it would slowly wind down a program to buy $300 billion in longer-term Treasuries by the end of October.
The minutes indicated the Fed was growing more confident in its view that the economic downturn was ending and that growth was likely in the second half of the year.
But policy-makers saw the economy as recovering only slowly and remaining vulnerable to adverse shocks.
Policy-makers had particular concern about weak labor markets and worried that sluggish income growth would hold back consumer spending.
(Reporting by Mark Felsenthal; Editing by Andrea Ricci)