January 5, 2018 / 5:19 PM / a year ago

Fed's Powell had little enthusiasm for QE3, transcripts show

SAN FRANCISCO/WASHINGTON, Jan 5 (Reuters) - Jerome Powell, President Donald Trump’s pick to lead the U.S. central bank starting next month, backed the Federal Reserve’s third bond-buying program only reluctantly, transcripts from the Fed’s 2012 policy meetings show.

“I’m supporting (the decision) with a certain lack of enthusiasm, and I am somewhat uncomfortable with the road that we are on,” Powell said at the Fed’s September 2012 meeting, when policymakers agreed to begin buying $40 billion in mortgage-backed securities a month to help keep interest rates low and boost hiring and investment.

Powell, who joined the Fed in mid-2012, said little on the program publicly at the time, and the transcripts offer a look at the contrast between his lukewarm embrace of the stimulus and the full-throated support from Yellen, who at time was No. 2 on the Fed Board.

The Fed releases meeting transcripts with a five-year delay, and published those from 2012 on Friday.

“Absent further policy action, I see little chance that unemployment will decline in the foreseeable future,” Yellen said at the same September 2012 meeting, according to the transcript. “We should not delay action any further.”

The transcripts also show plenty of light between Powell and Yellen in terms of how they come to, and frame, their policy views around the rate-setting table.

While Yellen’s comments are typically studded with references to models and the economic literature, Powell’s were often anecdote-driven. At the September meeting, for instance, he cited conversations with private equity investors that suggested to him the U.S. economy was still on good long-term footing.

Powell said it was telling that, despite the ongoing crisis in Europe, private equity investors appeared eager to snap up U.S. companies.

“They’re seeing something. They really are,” he said, according to the transcript.

Reporting by Ann Saphir in San Francisco and Lindsay Dunsmuir and Jason Lange in Washington; Editing by Andrea Ricci

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