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By BINYAMIN APPELBAUM
WASHINGTON — The Federal Reserve has left little doubt about its plans for the next few months, and thus little mystery about the statement it will release Wednesday after the latest meeting of its policy-making committee. The economy remains weak.
The Fed will keep buying bonds to hold down borrowing costs.
Inside the central bank, however, debate is once again shifting from whether the Fed should do more to stimulate the economy to when it should start doing less.
Proponents of strong action to reduce unemployment won a series of victories last year, culminating in December when the Fed announced that it would hold short-term interest rates near zero at least until the unemployment rate fell below 6.5 percent. The rate was 7.8 percent in December.
To accelerate that process, the Fed also said it would increase its holdings of Treasury securities and mortgage-backed securities by $85 billion each month until it sees clear signs of strength in the job market.
The Fed is expected to affirm both policies on Wednesday. The Fed’s chairman, Ben S. Bernanke, said this month that the persistence of high unemployment “motivates and justifies” the efforts.
Narayana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, is the only official who has publicly endorsed stronger action.
“Monetary policy is currently not accommodative enough,” Mr. Kocherlakota said, noting that unemployment is too high while the pace of inflation is too low — below the 2 percent annual pace that the Fed considers healthy.
Mr. Kocherlakota said the Fed should announce its intention to keep short-term interest rates near zero until the unemployment rate falls below 5.5 percent, rather than the 6.5 percent threshold the central bank adopted in December.
The Fed deliberately left the duration of the asset purchase program as an open question . . . .
http://www.nytimes.com/2013/01/28/bu...gewanted=print