Many Federal Reserve officials want to see more signs employment is picking up before they’ll begin scaling back $85 billion in monthly bond purchases, according to minutes of policy makers’ meeting last month.
Unemployment will fall to about 7 percent in the fourth quarter, according to economists at five of the world’s largest banks, creating more confusion among investors about the Federal Reserve’s bond-buying plans.
European stocks posted their first weekly advance since May 17 as China took steps to ease a cash crunch and U.S. data boosted optimism the global economy can withstand a paring of central-bank stimulus.
Federal Reserve Bank of Atlanta President Dennis Lockhart, who has supported Fed stimulus, said investors may have overreacted to Chairman Ben S. Bernanke’s announcement the central bank could start scaling back record stimulus this year.
Federal Reserve officials intensified efforts to curb a growth-threatening rise in long- term interest rates, seeking to clarify comments by Chairman Ben S. Bernanke that triggered turmoil in global financial markets.
Treasuries rose for a second day as Federal Reserve officials said investors may have overreacted to prospects for a reduction in the central bank’s bond-buying program as a selloff pushed yields to the highest since 2011.
European stocks dropped, paring their biggest weekly gain in almost two months, as technology companies retreated and a measure of business activity in the U.S. fell more than economists had projected.
Federal Reserve Bank of San Francisco President John Williams, who has never dissented from a policy decision, said “it’s still too early” for the Fed to begin trimming its bond-buying, warning of risks to the economy from low inflation and government budget cuts.