Federal Reserve officials are divided over when to cut off economic stimulus and how to tell the public about it, minutes from the central bank's latest meeting reveal.
The minutes from the June 18-19 meeting show Fed officials devoted a significant amount of time to debating how to lay out plans to slow down, halt and eventually unwind the unprecedented stimulus it had injected into the economy over the last several years.
"About half" of members of the policy-setting Federal Open Market Committee (FOMC) believe the Fed should begin slowing its purchases of billions of dollars of bonds before the end of the year, according to minutes. But "many other participants" said the Fed should keep up the purchase pace into 2014.
That debate came just before Fed Chairman Ben Bernanke attempted to detail such a plan, in comments that roiled markets and pushed several Fed officials to try and clarify the bank's intentions.
FOMC "generally agreed" on the need to provide more information on its monetary policy plans "relatively soon." In addition to near-zero interest rates, the Fed is currently buying $85 billion of bonds per month in its third round of "quantitative easing" in an effort to lower borrowing costs and boost the economy.
The minutes indicate that FOMC officials were torn on how exactly to deliver their message. While several thought the Fed should explain their future plans in a statement, the group ultimately agreed that Bernanke should explain at his press conference following the release of that statement.
The minutes also indicate that some Fed officials believe they should begin slowing purchases "likely soon," citing recent gains in the labor market. But other officials expressed concern at easing off the gas too quickly, or even discussing the idea, arguing it could be misinterpreted by financial markets as a sign the Fed was preparing to cut its economic support.
But with the recovery seemingly on solid ground, Bernanke attempted to explain how the Fed, constantly taking into account fresh information about the economy trajectory, would begin to turn off its stimulus.
Bernanke indicated that if all goes as expected, the Fed would wrap up the purchases in mid-2014 after spending months slowing the rate of purchases. But he added that adjustments could occur if the economy swings one way or the other, likening the effort to trying to land a jet on an aircraft carrier.
Following his remarks, the Dow Jones Industrial Average suffered its worst losses of the year, and several Fed officials delivered remarks in the coming days in an effort to clarify the central bank's plan.
This post updated at 3:16 pm.