WASHINGTON — Federal Reserve officials, many of them reluctant to continue the Fed’s economic stimulus campaign in its current form, wrestled at their most recent meeting with other ways of supporting an economy that still needs help.
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The discussions, described in the standard account of the meeting that the Fed published Wednesday, did not produce any immediate change in policy at the October meeting. Officials decided to press ahead with the current campaign, although the account said that a change could come “at one of its next few meetings.”
The outlines of that shift have been clear for some time. The Fed intends to reduce and then suspend its monthly purchases of Treasury and mortgage-backed securities. At the same time, the Fed is seeking ways of emphasizing that it remains determined to suppress borrowing costs for businesses and consumers.
The leading candidate, according to the Fed’s account, is a proposal to include in the Fed’s policy statement released after each meeting a formal declaration that the Fed is likely to keep short-term rates relatively low even after it eventually decides to end the long period, dating back to 2008, that it has held those rates near zero.
The Federal Open Market Committee also discussed the possibility of describing some of the factors that the committee would evaluate in deciding when to raise interest rates. So far, the committee has said only that it will keep interest rates near zero at least as long as the unemployment rate remains above 6.5 percent.
The Fed’s chairman, Ben S. Bernanke, employed both approaches in a speech Tuesday night. He described the 6.5 percent joblessness threshold as marking the point at which the Fed would begin to discuss the timing of an initial rate increase.
“After the unemployment threshold is crossed, many other indicators become relevant to a comprehensive judgment of the health of the labor market, including such measures as payroll employment, labor force participation, and the rates of hiring and separation” and the pace of inflation, Mr. Bernanke said.
Fed officials have generally described these possibilities as a way of limiting the extent of the Fed’s retreat as it pulls back from bond-buying, but the account of the meeting shows officials are increasingly concerned they may need to do more.
The account said that most officials were open to the idea of encouraging bank lending by reducing the interest rate on funds that banks keep on deposit with the central bank. This idea has long been advocated by economists including Princeton University’s Alan Blinder, the former Fed vice chairman. The account said it “could be worth considering at some stage,” though it noted the benefits were likely to be small.
Other possibilities that have been discussed publicly drew less support inside the Fed’s board room, including lowering the 6.5 percent threshold or stipulating that interest rates would remain low until inflation increased above a fixed level.
