Stocks Close Down After Fed Stimulus Debate

Feb 20, 2013 4:48pm

The Federal Reserve is considering tempering its efforts to stimulate the economy, according to minutes of their meeting released this afternoon.

The Dow had been trading down for much of the day but dived late in the afternoon after the minutes’ release.  The Dow Jones industrials ended the day down 108 points at the close of New York trading.

Fed members discussed whether to curb the stimulus, but made no decisions, according to the minutes. The Fed has said previously that it would not change course until there’s substantial improvement in unemployment.

The Fed’s moves have been supporting the stock and housing markets, while pushing down interest rates — allowing consumers to borrow cheaply.  Many Federal Reserve officials are concerned about the costs and risks of expanding its balance sheet, or what is referred to as printing money.

Concerns about what happens to the economy when the Federal Reserve winds down its stimulative efforts are not new, but many economists were surprised by the plain statements in today’s minutes.

Naysayers of Federal Reserve policy have long argued that the Fed’s measures have been artificially boosting the economy, leading to stronger closing bells.  More optimistic observers argue that the economy is recovering and may soon be able to thrive without the central bank’s support.


















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