Many Federal Reserve policy makers said additional stimuluswould probably be needed soon unless the economy shows signs of adurable pickup, according to minutes of their most recentmeeting.

“Many members judged that additional monetary accommodationwould likely be warranted fairly soon unless incoming informationpointed to a substantial and sustainable strengthening in the paceof the economic recovery,” according to the record of the FederalOpen Market Committee's July 31- Aug. 1 gathering released today inWashington.

Policy makers said after the meeting that they will step uprecord stimulus if needed to spur growth and cut a jobless ratestuck above 8 percent since February 2009. Chairman Ben S. Bernankewill have an opportunity to clarify his views in an Aug. 31 speechat a forum for central bankers in Jackson Hole, Wyoming, where hesignaled a second round of bond buying by the Fed in 2010. Fedofficials next meet on Sept. 12-13.

Many participants at the Fed's meeting said that a newlarge-scale asset-purchase program “could provide additionalsupport for the economic recovery.”

The minutes also reflected discussion of the merits ofpurchasing Treasury securities relative to mortgage-backedsecurities. While “some” members worried about the impact on debtmarkets, a staff analysis showed “substantial capacity foradditional purchases without disrupting market functioning.”

Policy makers, who said in their Aug. 1 statement that economicconditions “warrant exceptionally low levels for the federal fundsrate at least through late 2014,” discussed extending the durationfor how long they will keep the main interest rate near zero, theminutes show.

The Standard & Poor's 500 Index pared declines after therelease of the minutes, falling 0.3 percent to 1,409.35 as of 2:23p.m. in New York after declining as much as 0.5 percent. The yieldon the 10-year Treasury decreased 0.08 percentage point to 1.71percent.

“It was noted that such an extension might be particularlyeffective if done in conjunction with a statement indicating that ahighly accommodative stance of monetary policy was likely to bemaintained even as the recovery progressed,” according to theminutes.

2014 Guidance

Participants questioned whether the guidance was clear enough,and “a few” suggested that the committee replace the date withchanges in the economy that would prompt policy makers to raise thefed funds rate, or cut guidance language entirely, the minutesshow.

Policy makers “agreed to defer a decision on this matter” untilthe September meeting when they will update their economicforecasts.

The minutes show the FOMC also discussed other options forboosting stimulus, including cutting the interest rate paid onreserves banks keep at the Fed.

“While a couple of participants favored such a reduction,several others raised concerns about possible adverse effects onmoney markets,” the minutes said.

A couple of Fed members also “expressed interest” in exploringprograms similar to the Bank of England's Funding for LendingScheme which seeks to encourage lending to households andfirms.

The minutes show the FOMC continuing to discuss the ways theycommunicate with the public about policy. The Fed's staff presentedresearch on so-called monetary policy rules that would guide Fedaction.

The subcommittee on communications developed an “experimentalexercise” to see whether the committee could present a “consensusforecast” of the committee's views.

Since the FOMC meeting, some U.S. economic data have exceededexpectations, with retail sales increasing in July and employersadding 163,000 jobs, the most in five months. Industrial productionand consumer confidence also rose, and a report today showed salesof existing homes climbed in July from an eight-month low.

The brighter data has helped push the S&P 500 to sixstraight weekly gains and to almost a four-year high.

Atlanta Fed President Dennis Lockhart, an FOMC voter this year,said yesterday the committee faces a risk of easing too much whiletrying to energize a “disappointing” three-year-old recovery. Incontrast, he said last month that weak economic data increased theodds he would back more Fed purchases of bonds known asquantitative easing to cut borrowing costs.

Enough Already

Dallas Fed President Richard Fisher, who doesn't vote on policythis year, said on Aug. 8 the Fed has already provided sufficienteconomic stimulus.

“There's a growing perception right now that the economy isn'tthat bad even though it's not as good as people would like,” saidBluford Putnam, the chief economist at CME Group Inc., theChicago-based owner of the world's largest futures market.

“If the data improve, then the Fed can look eventually towardnormalizing monetary policy,” said Putnam, a former economist atthe Federal Reserve Bank of New York. He spoke before release ofthe minutes.

Retail sales rose 0.8 percent in July, the biggest gain sinceFebruary and first increase in four months, the Commerce Departmentsaid Aug. 14. A separate report the same day showed thatinventories at U.S. companies rose in June at the slowest pace innine months.

Those reports reduce the chance the FOMC will announce a thirdround of quantitative easing at its next meeting because “continuedweakness is necessary to prompt a substantial easing move,”according to a report from Goldman Sachs Group Inc. Chief EconomistJan Hatzius.

“U.S. economic data continue to look a bit stronger,” the NewYork-based economist wrote Aug. 14. Still, a “very solid case” formore accommodation remains, and the Fed will probably decide toease policy after next month's meeting.

Boston Fed President Eric Rosengren and John Williams of SanFrancisco have called since the FOMC meeting for additionalstimulus to jump-start growth and reduce unemployment. Rosengrentold CNBC on Aug. 7 that policy makers should pursue an “open-ended” program of bond purchases known as quantitative easing.

Williams said in an interview with the San Francisco Chroniclethat weakening employment, consumer spending and economic growthsuggest the Fed should begin a third round of bond purchases.Williams holds a vote on the FOMC this year, while Rosengrendoesn't.

Jobless Rate

Record Fed stimulus has failed to bring about a sustaineddecline in the jobless rate, which climbed in July to 8.3 percent,the same level as January. The pace of payrolls growth slowed to anaverage of 73,000 a month in the second quarter compared with anaverage of 226,000 in the first quarter.

Policy makers are concerned economic growth is too weak to buoythe job market. The world's largest economy will probably expand1.8 percent in the third quarter and 2.1 percent in the finalquarter, according to the median of 75 estimates in a Bloombergsurvey. Gross domestic product grew 2 percent in the first quarterof this year before decelerating to 1.5 percent from April untilJune.

The U.S. expansion faces headwinds from a faltering worldeconomy. The International Monetary Fund last month cut its 2013global growth forecast as Europe's debt crisis prolongs Spain'srecession and weighs on emerging markets from China to India.

Chicago Fed President Charles Evans said to reporters today inBeijing that a weakening in global trade is “awful.”

In the short term, global economic growth will probably holdsteady, according to Frank Calderoni, chief financial officer forCisco Systems Inc., the biggest maker of computer- networkingequipment.

The San Jose, California-based company forecasts “neither asignificant improvement nor a deterioration in global macro-economic conditions in the near future,” Calderoni said on aconference call with analysts. Cisco soared 9.6 percent on Aug. 16after posting profit and sales that topped analysts' estimates.

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