Some at Fed urged more stimulus

The Federal Reserve should take more aggressive action to stimulate the U.S. economy and lower unemployment, a few members of the Fed's policy-setting committee said at this month's meeting.

Those members, who were not identified in minutes of the session released Tuesday, "felt that recent economic developments justified a more substantial move" than just the pledge adopted at the Aug. 9 meeting of the Federal Open Market Committee to hold its key interest rate at a record low until mid-2013.

The minutes indicate that Fed officials will more fully debate their options when they meet in late September for a two-day meeting that was originally scheduled to last one day.

Fed officials at the August meeting discussed a range of tools, including buying more government bonds, to bolster the economy. But beyond their promise on interest rates, they did not come to an agreement on what the Fed's next step might be should the economy continue to weaken.

At the August meeting, the Fed staff cut its estimate for growth in the gross domestic product in the second half of 2011. That was the fourth consecutive downward revision to its near-term outlook, the longest series of downward revisions since the recovery began two years ago. The staff also cut its 2012 outlook.

Besides buying government bonds, the Fed could cut the 0.25 percent interest rate it pays banks on the $1.6 trillion in excess reserves parked at the Fed.

It also could replace shorter-term securities with longer maturities, which may help lower interest rates on mortgages and other long-term debt. The Fed also could pledge to keep its balance sheet near a record high of $2.86 trillion for an "extended period" or for a specific time period.

In contrast, some Fed officials "judged that none of the tools available" to the Fed "would likely do much to promote a faster economic recovery," the minutes said.