Fed divided on Aug decision to buy Treasuries-WSJ

NEW YORK, Aug 23 (BestGrowthStock) – At least seven of the 17 top
Federal Reserve officials at the U.S. central bank’s August
meeting had reservations about the decision to buy more
Treasuries, the Wall Street Journal reported on Monday.

In a significant policy shift, the Fed announced at its
Aug. 10 policy meeting that it would begin using the proceeds
from maturing mortgage securities in its portfolio to buy
Treasury notes, an effort to prevent monetary conditions from
slowly tightening over time.

The formal vote at the meeting — 9 to 1 in favor —
disguised the extent of the disagreement, the Journal said,
citing people familiar with the discussion.

While the meetings are attended by all 12 regional Fed
presidents and five Washington-based governors, only five Fed
presidents have a vote at any one time.

Governor Kevin Warsh worried a decision to reinvest
mortgage proceeds into Treasuries would confuse investors and
lead many to believe the Fed was paving the way to resume major
purchases before it had decided to do so, the newspaper said.

Richard Fisher, president of the Dallas Fed, and others
expressed concern that Fed moves might be ineffective, while
Philadelphia Fed President Charles Plosser judged the action as
premature, the Journal said.

The extended debate about how best to counter the slowing
U.S. economy was eventually settled by Fed Chairman Ben
Bernanke, who pushed successfully to proceed with the move.
(Reporting by Yinka Adegoke; Editing by Tomasz Janowski)

Fed divided on Aug decision to buy Treasuries-WSJ