Fed's 2012 Transcripts: Jerome Powell Warned of Boosting Fed Asset Purchases in October 2012

Fed governor Jerome Powell raised concerns at the Fed's October 2012 meeting about the prospect of boosting its monthly asset purchases to help stimulate the economy, noting that markets then assumed the Fed's portfolio of holdings would grow close to $4 trillion, according to meeting transcripts released Friday.

(The balance sheet ultimately reached $4.5 trillion before the central bank began shrinking it last year.)

Mr. Powell questioned why the Fed would stop at $4 trillion. "It will never be enough for the market," he said. "Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated."

He also warned the Fed was at the point of encouraging risk-taking, and that it could be difficult to wind down such a massive portfolio. "We seem to be way too confident that exit can be managed smoothly," he said. "Markets can be much more dynamic than we appear to think."

The Fed voted to increase its monthly asset purchases at its December 2012 meeting.

-- Kate Davidson

(END) Dow Jones Newswires

January 05, 2018 13:05 ET (18:05 GMT)