The members of the Federal Open Market Committee discussed providing additional stimulus to the economy — possibly through more bond buying — at their June confab, according to the minutes of the meeting. The central bankers said “if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run,” another round of stimulus may be needed. Both the pace of the recovery and the labor market remain worse than committee members project. And inflation increased in recent months on higher commodities prices and supply chain problems related to the tsunami in Japan, according to the FOMC minutes. A few members said inflation risks from continued weak jobs data suggest economic conditions may eventually “warrant the committee taking steps to begin removing policy accommodation sooner than currently anticipated.” The FOMC once again voted to keep the fed funds rate near zero at its latest meeting last month and completed its $600 billion bond buying program at the end of June. Some market participants think a third round of quantitative easing is a foregone conclusion. The minutes of the latest FOMC meeting show members mulling various options to return to a more normal monetary policy now that QE2 is over. “For concreteness, the committee considered a set of specific principles that would guide its strategy of normalizing the stance and conduct of monetary policy,” according to the minutes. One thing the central bank plans to do is “modify its forward guidance on the path of the federal funds rate and will initiate temporary reserve-draining operations aimed at supporting the implementation of increases ion the federal funds rate when appropriate,” according to the minutes. Write to Jason Philyaw.

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