Despite the job market’s recovery from last month’s forecast by the Federal Reserve, officials remain unhappy.
A consensus that was still strongly linked with the completion of the planned purchase of $600 billion of government bonds was recommended on the minutes of the Fed’s January 25-26 policy session that was released on Wednesday. However, few Fed members had doubts whether a continued stronger data might call for restraining the program.
Officials believe disadvantages to the recovery with no mention of a possible extension of the bond purchase plan. Policymakers saw slow unemployment reduction and some believe recovery would grow stronger so fast to warrant bond-buying plan control.
Slow U.S. Treasury debt prices that slipped on better producer prices further dipped after the report.
From November’s 3-3.6% projection, Fed officials increased growth expectation from 3.4-3.9%; 2012 and 2013’s projection almost did not change. Unemployment and inflation forecasts were slightly changed too.
The U.S. unemployment rate was seen from 8.8-9% in the 4th quarter in 2011 with its very slow decline on the 3-year forecast by the Fed. Their November unemployment rate forecast was from 8.9-9.1%.
Report showed unemployment rate dropping only 9% in January, placing it on top of the Fed’s last quarter for 2011.
Inflation forecast of the Fed for 2011 shifted from 1.1%-1.7% in November to 1.3%-1.7%. The global rise of commodity prices has sparked inflation fears and the Fed is claimed to be behind inflation control.
Group of 20 leading economies’ finance officials will meet in Paris this weekend and may question Fed Chair Ben Bernanke on easy money policies as some emerging market countries blame the Fed for the global inflation that is affecting their economies.
A Wednesday report reflected a fast rise in basic U.S. wholesale inflation in over 2 years in January. This has caused concern that costly energy and food prices are passed through to other prices- something the economists expect to be limited to U.S consumer prices.
The Fed said some policymakers believed energy and some commodity price increases are a risk but many officials believed that high unemployment may keep inflation in check.
The Fed stated a more positive economy view and they agree to stick with their plan to buy longer-term Treasury securities to improve economic growth. Some question the impact that this may have on the economy but agree to continue with what’s already planned.
Some said if strong growth moves faster, the central bank has to reassess the program, a suggestion made by Richmond Fed President Jeffrey Lacker.