Fed Minutes Show Concern on Economy, Tight Credit

Federal Reserve officials judged the economy to be at risk from further shocks when they met last month and kept a key interest rate at an all-time low, according to minutes of the meeting released Wednesday.

“Most participants saw the economy as still quite weak and vulnerable to further adverse shocks,” the Fed said in the minutes its June 23-24 meeting. “Although financial market conditions had improved, credit was still quite tight in many sectors.”

Policy makers were concerned that consumer spending will resume its decline once temporary benefits to household income from the federal stimulus plan subside, Bloomberg reported, citing the Fed.

Some officials also saw a danger of a renewed decline in the housing market, in part as mortgage rates increase, and the Fed governors were split on the outlook for inflation, Bloomberg said.