The minutes of June's gathering of the Federal Open Market Committee (FOMC) – the body that sets interest rates in the US – show that some officials believe fresh stimulus may need to be considered while others estimate that the risk of stoking inflation is now too high for such actions.
The FOMC last month ended its controversial policy of quantitative easing, which saw the central bank buy $600bn (£377bn) of government bonds from banks and insurance companies in an effort to keep long-term interest rates low.
Ben Bernanke, the chairman of the Fed, indicated in April that a further bout of QE would risk triggering inflation.
In the minutes of the meeting of June 21-22, released yesterday in Washington DC, the central bank said that "the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run".
Hopes that economic growth would accelerate in 2011 have so far been disappointed as the rising petrol and food prices that marked the first five months of the year hit US consumers. That optimism was dampened further last week by the employment report for June that showed the US economy created just 18,000 jobs last month, against expectations of 100,000-plus. Few on Wall Street now think the world's biggest economy expanded at much more than a 2pc pace last quarter.
The Telegraph
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http://www.telegraph.co.uk/finance/economics/8633470/US-Federal-Reserve-faces-split-if-economy-fails-to-pick-up.html
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