Font ResizeAnd the Federal Reserve seems likely to keep its stimulus pumps running at least awhile longer—although minutes from a recent meeting show growing nervousness among U.S. central bankers over possible long-range harmful consequences, including steep inflation and instability in financial markets.
The Fed, under Chairman Ben Bernanke, has been keeping a key short-term interest rate near zero for over four years and is buying tens of billions of dollars in Treasury and mortgage bonds a month to keep downward pressure on longer-term interest rates and to provide liquidity to financial institutions.
Oh, and it's buying those bonds with money created out of thin air with the electronic equivalent of a printing press.
Minutes from the Fed's Jan. 29-30 policy meeting showed increasing debate over whether to end the huge stimulus sooner rather than later.
Still, the Fed voted 11-1 to continue its $85-billion monthly bond buying program for now.
However, the concerns were enough to drive European stocks sharply lower Thursday and contributed to a second day of declines for U.S. stocks—even though there's scant evidence of rising inflation.
U.S. consumer prices were flat last month, a new government
The latest crisis for President Barack Obama and Congress is the approach of deep, mandatory "sequester" spending cuts due to hit March 1 absent a bipartisan deficit-reduction deal. So far Republicans who lead the House have rejected Obama's insistence that any agreement be "balanced" with both spending cuts and increased tax revenues.
U.S. policymakers barely averted a "fiscal cliff" at the end of last year.
"Managing from crisis to crisis every 60 to 90 days is absurd," House Minority Whip Steny Hoyer, D-Md., said Thursday on MSNBC.
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