WASHINGTON - Amid uncertainties about strength of the budding recovery, U.S. Federal Reserve policy-makers last month were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and prop up the housing market, according to a document released Wednesday.
In the end, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of a US$1.25-trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed said it would do so by the end of March.
But minutes of the Fed's closed-door deliberations on Sept 22-23, revealed some members thought "an increase" in the mortgage securities buying program could help the economy recover more quickly. Another member believed "a reduction" was warranted because the recovery was showing signs of picking up.
The minutes don't identify speakers by name, but rather seek to provide a more detailed account of the Fed's discussions.
The central bank last month also agreed to slow down purchases of $200 billion in debt from Fannie and Freddie, although there were no fractured thoughts on that action.
At the same time, the Fed held its key bank lending rate at a record low near zero. It pledged to hold it there for an "extended period" to nurture the recovery. Fed policy-makers "judged that the costs of growth turning out to be weaker than anticipated could be relatively high," according to the minutes.