Fed: Action likely justified \'fairly soon\'

Something will probably need to be done soon to boost the U.S. economy if growth doesn\'t pick up considerably and stay considerable, the Federal Reserve said. \"Many members [of the Fed\'s policymaking Federal Open Market Committee] judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,\" the minutes of the July 31-Aug. 1 FOMC meeting said. The directness of the statement, made public Wednesday after a customary three-week lag, suggested the Fed was leaning toward taking action and was setting a high bar for holding off, The Wall Street Journal and Financial Times said. Many market participants believe the minutes indicate a new round of long-term bond buying, known as quantitative easing, was high on the Fed\'s list of options, the Journal and The New York Times said. The new round is known as QE3 because the Fed has done this twice before. Under quantitative easing, the central bank buys bonds to inject a pre-determined quantity of new electronically created money into the economy. This is separate from the traditional policy of buying and selling government bonds to keep market interest rates at a specified target. The FOMC board was not unanimous, the minutes indicated. \"I don\'t think the quantitative easing that we have done is enormously effective,\" Dallas Fed President Richard Fisher told the Journal last week. But he and the other hawks are in the minority, the FOMC minutes indicated. \"Many participants expected that such a program [of quantitative easing] could provide additional support for the economic recovery both by putting downward pressure on longer-term interest rates and by contributing to easier financial conditions more broadly,\" the minutes said. The committee next meets Sept. 12-13. Fed Chairman Ben Bernanke is also scheduled to hold a news conference. Bernanke -- nominated to serve as Fed chairman by Republican President George W. Bush and later asked to serve a second term by President Barack Obama, a Democrat -- has said the Fed does not take politics into consideration. The Fed chairman is expected to give a speech at an economists meeting in Jackson Hole, Wyo., Aug. 31. That invitation-only meeting -- hosted by the Kansas City Fed, whose jurisdiction includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and portions of western Missouri and northern New Mexico -- is where Bernanke hinted at QE2 in 2010. But Allen Sinai, chief global economist and strategist for Decision Economics Inc. and a Jackson Hole attendee for 20 years, told CNN people \"will be disappointed\" if they think Bernanke will signal the Fed is ready to launch QE3. Brandeis University global finance Professor Catherine Mann, a former Fed board of governors member, added, \"I don\'t think he\'s going to say anything new.\"