Federal Reserve officials are increasingly concerned about potential risks of the U.S. central bank's bond purchases, even if they look set to continue an open-ended stimulus program.
In a surprise to Wall Street, minutes from the Fed's December policy meeting, published Thursday, showed a growing reticence about further increases in the central bank's $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.
"Several [officials] thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet," the minutes said.
Analysts didn't expect to see as much worry in the Fed's minutes about one of its key efforts to revive the U.S. economy.
"The minutes of the Federal Reserve's December monetary policy meeting revealed a somewhat surprising level of concern among the ranks of central bankers regarding the long-term impact of the bank's asset purchase program," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.
Still, the Fed appeared likely to continue buying assets for the foreseeable future, having announced in December it was extending monthly purchases of $40 billion in mortgage securities and also buying $45 billion in Treasuries each month.
A few of the voting members on the central bank's policy-setting Federal Open Market Committee thought asset buying would be warranted until about the end of 2013. Others highlighted the need for further large-scale stimulus but did not specify an amount or time frame.
Fed officials generally agreed the labor market outlook wasn't likely to improve without further nudging from the monetary authorities. -- Reuters