US Federal Reserve officials are weighing a more open-ended, smaller-scale bond buying programme compared with 2009, when they announced massive bond purchases with a finite end, the Wall Street Journal reported. The Fed hasn't yet decided to step up its bond purchases, let alone agree on an approach, the newspaper reported on its website.
A call on whether to buy more bonds depends on incoming data about economic growth and inflation, the paper said, adding that if the economy picks up steam, officials might decide no action is needed. In March 2009, the Fed said it would buy $1.7 trillion worth of Treasury and mortgage-backed securities over a six- to nine-month period.
Under the alternative approach gaining favour inside the Fed, it would announce purchases of a much smaller amount for some brief period and leave open the question of whether it would do more, a decision that would turn on how the economy is doing, the Wall Street Journal said.
The WSJ report comes at a time when many analysts expect the US central bank to relaunch large-scale purchases of Treasury securities - perhaps as soon as its next meeting in November. After cutting the overnight federal funds rate to near zero in December 2008, the Fed launched an asset-buying program in a further effort to lower borrowing costs and help the economy. In the end, it bought $1.7 trillion in longer-term US government debt and mortgage-related bonds.
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