TEXT OF INTERVIEW
BOB MOON: A couple of weeks ago, the Federal Reserve surprised the markets when it decided to buy more government debt. It was seen as a “Hail Mary” pass, of sorts, to further prop up the weak economy. But with interest rates already near zero, the Fed has just a few more moves left in its playbook to score economic points. And we’re just learning that there was far more debate than usual about the move. Marketplace’s Amy Scott joins us live with the details. Good morning, Amy.
AMY SCOTT: Good morning, Bob.
MOON: So what are we hearing about this unusual debate within the Fed?
SCOTT: Well this comes from the Wall Street Journal. It reports today that at least seven out of the 17 Fed officials meeting on August 10 had some reservations about what the Fed should do about the economy. The Journal called it among the most contentious of Ben Bernanke’s tenure.
MOON: OK, then remind us in the end what the Fed decided to do at that meeting on August 10.
SCOTT: The Board decided to shore up the Fed’s $2 trillion balance sheet of securities. Rather than let it shrink, they’re going to keep buying government debt to keep interest rates low. Of course, not all the members get to vote and in the end the formal vote was 9-1 in favor.
MOON: And what were the two sides of this divided thinking, exactly?
SCOTT: Well, some officials were worried about confusing investors — making them think that the economy is even worse off than it is. Others were worried that the strategy just might not work. The question now is what this dissent might mean for future Fed policy and we’ll likely hear about potential strategies when Ben Bernanke and other officials meet in Jackson Hole, Wyo., later this week.
MOON: Marketplace’s Amy Scott, thanks.
SCOTT: You’re welcome.
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