“We are seeing steady improvement” in the economy, Powell of General Mills said.
Slack in the labor market, including 7.6% unemployment last month, helped keep inflation for the 12 months ending May a full point below the Fed’s 2% goal, reducing the odds of any tightening based on that measure. the participants on the FOMC. In December, when the committee expanded the program of $40 billion in monthly buying of mortgage bonds with purchases of $45 billion of Treasuries, about half of FOMC participants wanted to halt the stimulus around the middle of this year, according to minutes from the meeting.
After a March staff presentation on the costs and benefits of the program, “many” participants called for slowing the pace of purchases over the next several meetings if labor markets continued to improve. By the June 18-19 meeting, “about half” of the participants “indicated that it likely would be appropriate to end asset purchases late this year,” according to meeting minutes.
The language suggests that concern over the risks from the program extends beyond the four Fed regional bank presidents who have publicly spoken out against it: Esther George of Kansas City, Jeffrey Lacker of Richmond, Richard Fisher of Dallas and Charles Plosser of Phildelphia.
George, the only one of the four presidents with an FOMC vote this year, has dissented against additional stimulus at all four meetings this year. In June she cited the “risks of future economic and financial imbalances” and the possibility long- term inflation expectations may rise.
Bernanke’s comments to the House today and Senate tomorrow may be his final semi-annual testimony. His second four-year term expires in January. While Bernanke has declined to describe his plans, President Barack Obama said last month the Fed chairman has stayed in his post “longer than he wanted.”