In a surprisingly strong signal, many of the rate setters at the Fed have decided that further stimulus is needed "fairly soon", according to theminutes of their meeting this month.
Many of those on the Federal Open Market Committee (FOMC) - the equivalent of the Bank of England's Monetary Policy Committee - also judged that more quantitative easing could offer "additional support" for the economy.
Economists said the minutes showed that after a summer watching the recovery lose momentum, top officials at the central bank have decided that the potential benefits of further action outweigh the risk of fueling inflation.
After an encouraging first quarter of the year, the world's biggest economy expanded at an annual pace of just 1.5pc in the second as employment growth weakened and consumers retrenched. With Europe's debt crisis far from over, and the US presidential election a matter of weeks away, few private forecasters expect growth to pick up in the second half of the year.
The Congressional Budget Office warned today that the US could plunge back into recession if a series of tax increases and spending cuts are allowed to take effect at the start of the year.
The minutes from the meeting at the start of this month also suggested that the economy slowed far more rapidly in July than most on the FOMC had anticipated, with growth in the manufactuing sector and consumer spending both easing.
The strong hint that the central bank is moving closer to action only sharpens the focus on next week's annual gathering of policymakers at the mountain resort of Jackson Hole, Wyoming. Fed chairman Ben Bernanke will deliver a speech on August 31 at the gathering he used to launch the second round of quantitative easing in 2010.
However, there was caution from some economists who pointed out that the data has broadly improved since officials last met. The tally of jobs created in July was the strongest in five months, while the most recent surveys suggest consumer confidence has strengthened. Whether it meets the threshold of a "substantial and sustainable" strengthening that the FOMC said would prevent it from taking action remains unclear.
As Fed watchers tonight pored over the minutes, analysts also said that the next meeting of the FOMC on September 13 is likely to be the last one at which they can introduce fresh stimulus before American go to the polls on November 6.
The Telegraph
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