Economic growth has strengthened slightly, Fed officials noted, but they remained cautious about a broad pick up in U.S. activity, focusing heavily on a still elevated jobless rate.
Despite this caution, only “a couple” of members thought additional monetary stimulus might be needed to support the economy if it loses momentum or inflation remains too low for too long.
That was a much less robust showing than in January, when a few members saw a possible need for additional easing before long, while another contingent thought that stimulus might be required if economic conditions worsened.
Only last week, Fed Chairman Ben Bernanke had kept alive the idea of more stimulus when he warned business economists about the risks that long-term unemployment could lead to prolonged economic malaise in the United States. Investors had interpreted those comments as suggesting Bernanke leaned toward a third round of bond buys, known as quantitative easing or QE3.
The latest Fed’s minutes sent a different message by toning down support for further stimulus, which hammered U.S. stocks, bonds and gold, and pushing the dollar higher.
“The minutes threw water on the resurrected notion that QE3 was still very much on the table,” said Clark Yingst, chief market analyst at Joseph Gunnar & Co. in New York.
CONTINUED at Yahoo Finance.