Transcripts show Fed divided in 2011 over bond purchases

WASHINGTON (AP) — Newly released transcripts show Federal Reserve officials were sharply divided in 2011 over whether the central bank should launch a program aimed at pushing long-term interest rates lower to spur economic growth.

In addition to a worsening debt crisis in Europe, the global economy had been jolted by a severe earthquake and tsunami in Japan in March of 2011, which disrupted global supply chains.

The Fed in December 2008 had cut its target for a key interest rate, the federal funds rate, to a record low near zero.

With no ability to lower the rate further, the Fed in late 2008 began buying long-term Treasury bonds and mortgage-backed securities as a way to push long-term interest rates lower and provide a further boost to the economy.

[...] these rounds of bond purchases, labeled quantitative easing, had drawn criticism from Republicans in Congress, who believed they were raising inflation threats and possibly creating potentially dangerous asset bubbles in such areas as stock prices.