May 20, 2009, 2:27 p.m. EST

Fed eyes more purchases of long-term assets
Green shoots of recovery viewed with some suspicion
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- Federal Reserve officials considered how and when it might make sense to boost the central bank's open market purchases of bonds and other long-term securities, including Treasurys, according to the minutes of their closed-door meeting in late April.

Some Fed officials were in favor of buying more securities "at some point" to give the economy a greater kick.

The central bankers discussed when it might make sense to purchase the assets and how they would communicate their intentions to financial markets.

At the end of their meeting, the FOMC announced that it was holding policy steady and said it would "continue to evaluate the scope and timing of its purchases in light of broader economic developments."

The minutes did not detail any of the factors that might persuade the Fed to step up the pace of purchases.

The Fed has already agreed to buy $1.25 trillion of agency mortgage-based securities and up to $200 billion in agency debt by the end of the year, and up to $300 billion of Treasury securities by autumn.

While recognizing that the downturn was starting to loose its force, the tone of the discussions was not very upbeat.

Officials emphasized the tentative nature of the incoming data.

The central bankers were forced to lower their forecast for growth this year given the weakness in the first quarter. But the central bankers stuck to their prediction of a rebound in the second half of this year.

However, the recovery was seen as very gradual.

It might take five years or more before the unemployment rate would return below 5%.