Fed minutes suggest no immediate end to QE stimulus

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Media captionThe chairman of the US Federal Reserve, Ben Bernanke, said that QE would continue

Minutes of the Federal Reserve's last policy meeting say officials want more evidence of a jobs market recovery before winding up stimulus measures.

The minutes show that "about half" of the Fed's board felt the $85bn-a-month stimulus programme could be phased out by the end of 2013.

Speculation that the Fed might halt quantitative easing within a couple of months had unnerved Wall Street.

But the news that there would be no immediate exit sent US markets higher.

"Several members judged that a reduction in asset purchases would likely soon be warranted," the minutes released on Wednesday said.

The minutes added that "many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases".

In addition, most of the Fed's board said it should stick to its ultra-low interest rate policy through to the end of 2015. However, four members thought the benchmark rate could be increased this year or next year.

Timeframe doubt

The chairman of the Federal Reserve, Ben Bernanke, underlined his position on Wednesday during a question and answer session at the National Bureau of Economic Research in Cambridge, Massachusetts.

He said that given the current unemployment rate in the US and cutbacks in government spending "highly accommodative monetary policy for the foreseeable future is what is needed for the US economy".

Since late last year, each month the Fed has been buying $85bn in Treasury and mortgage bonds.

The purchases have kept interest rates low, with the aim of encouraging more Americans to buy homes and cars, and hopefully bolster economic growth.

Investors worry that once the Fed starts scaling back its bond buying, interest rates will rise.

In afternoon trading, after the minutes for the meeting in June were released, the Dow Jones and S&P began moving higher.

Kim Rupert, a managing director at Action Economics, said it was now more unclear when the Fed might run down its easy money programme.

"Most (analysts) had expected September might be a good starting point. This throws a lot more doubt on that timeframe."

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