As economy struggles, Fed weighs boosting bond purchases

Agency has been buying $ 120B in bonds each month, but that may rise.

WASHINGTON — At their meeting earlier this month, Federal Reserve officials discussed possible future adjustments to the central bank’s monthly bond purchases to boost the economy.

The Fed on Wednesday released minutes of its Nov. 4- 5 meeting revealing t hat , al t hough off i - cials believed that no changes were needed to the bond purchase program at that time, “they recognized that circumstances could shift to warrant such adjustments.”

The Fed since June has been buying $ 120 billion in bonds each month to keep downward pressure on long- term interest rates as a way of giving the economy a boost as it struggles to emerge from a deep recession.

The purchases have included $ 80 billion a month in Treasury bonds and $ 40 billion in mortgage- backed securities.

With t he economy showing signs of slowing in the face a resurgence in coronavirus cases and a return to shutdowns in some areas, t here has been market speculation that the Fed could decide to boost the size of i ts monthly purchases.

The minutes show that, although no decision was taken on what to do or when, Fed officials were keeping their options open. Some analysts believe the Fed will make an announcement on boosting the bond purchase program at its next meeting Dec. 15- 16, especially if there has been no movement by Congress to provide more economic relief to individuals and businesses.

The minutes said that many Fed officials “judged that asset purchases helped provide insurance against risks that might reemerge in financial markets in an environment of high uncertainty.”

Concern has been growing among economists that the economy is slowing after an initial rebound this summer and could even topple into a double- dip recession in the early part of 2021 if Congress does not replenish expiring support programs.