Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Fed Regional Bank Directors Were ‘Cautious’ on Economic Outlook

Directors at the Federal Reserve’s regional banks said at their August and September meetings they remained cautious about the short-term outlook for the economy while expressing confidence in its longer term performance.

“Directors remained cautious about the near-term prospects for economic growth, although most directors still expected economic conditions to improve over the longer term,” according to minutes released today in Washington summarizing the discussions. Some saw “moderate growth in consumer spending, as well as strong performance in energy-related sectors.”

The directors continued to note gains in home sales and prices, while some directors “expressed concern about ongoing weakness in the manufacturing sector” and the damage to agriculture from drought in some regions, board members of the 12 banks said, according to the minutes.

The Federal Open Market Committee is scheduled to meet Oct. 23-24 after expanding record stimulus last month with an announcement of new bond buying. Chairman Ben S. Bernanke and his colleagues have two meetings remaining this year to decide whether to extend Operation Twist, a program to extend the maturity of securities in the Fed’s portfolio. Operation Twist expires in December.

Fed regional bank directors said strains in global markets and uncertainty about the U.S. budget and regulations pose downside risks to the economy because of “their dampening effect on firms’ hiring and investment decisions,” according to the minutes. “Longer-term inflation expectations had inched up recently but remained stable overall.”

No End Date

The Fed said Sept. 13 it will undertake a third round of quantitative easing with open-ended purchases of $40 billion of mortgage debt a month. The program has no end date or fixed total amount, unlike the first two. In the first, starting in 2008, the Fed bought $1.25 trillion of mortgage-backed securities, $175 billion of federal agency debt and $300 billion of Treasuries. In the second round, announced in November 2010, the Fed bought $600 billion of Treasuries.

Policy makers in June extended Operation Twist, a program to swap $667 billion of short-term debt with longer-term securities to lengthen the average maturity of its holdings. The central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities.

The economy expanded at a 1.3 percent pace in the second quarter, slower than a prior estimate of 1.7 percent and the 2 percent rate in the first quarter. The unemployment rate unexpectedly fell to 7.8 percent in September as employers took on more part-time workers.

Prior Meetings

Recommendations about changing the discount rate, which has been at 0.75 percent since February 2010, were similar to those at earlier meetings. Members of the Boston Fed’s board of directors urged a quarter-percentage point reduction, to 0.5 percent, while the Kansas City Fed repeated its request for a quarter-point rise to 1 percent. The other 10 banks did not request a change.

The Fed’s 12 regional banks each have nine-member boards of directors that request discount-rate changes. The requests are subject to final review and determination by the Fed Board, which consists of the central bank’s seven Washington-based governors. They review requests about every two weeks.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.