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Published: Thursday, 7/12/2012

Jobless rate won't prompt Fed action, report says

Economic growth slower than expected


WASHINGTON -- Federal Reserve officials agreed at a meeting in June that unemployment would remain elevated another five to six years, but most did not regard that as a reason for the Fed to expand efforts to stimulate growth, according to an account published Wednesday.

The official account said that "a few" of the 12 officials who vote on Fed policy thought further measures, such as bond purchases, "likely would be necessary to promote satisfactory growth." It added that several other officials were willing to consider such measures if economic conditions worsened.

The Fed expected slow growth this year, but the account of the June meeting -- released by the central bank after a standard three-week delay -- suggested officials were disappointed by recent economic data. Several officials said that "a variety of indicators showed smaller gains than had been anticipated."

They also remained concerned by potential fallout from a crisis in Europe, identified as the primary risk to near-term growth.

The officials decided at the meeting, held June 19 and 20, to continue a modest asset purchase program through year's end. The account said Fed officials judged the purchases "would put some downward pressure on longer-term interest rates and help make broader financial conditions more accommodative."

There were also indications that Fed officials were worried inflation was slowing. The central bank regards a 2 percent annual pace of inflation as healthy.

The account said more members of the committee expressed concern about that possibility in June than at an April meeting.

Some Fed officials opposed additional action because they were concerned that it would raise the pace of inflation.

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