By NBC News staff and wire reports
Federal Reserve officials, concerned that the U.S. economy is not producing jobs fast enough to boost the economy, are mulling taking steps to stimulate growth, according to news reports.
The Wall Street?Journal and the New York Times said Tuesday that Fed officials have hinted in speeches, in testimony to Congress and in interviews?that the central bank needs to act if the economy shows no signs of improving soon.
Recent indicators show the economy has begun to stagger amid worries about sluggish job growth, the eurozone debt crisis and a looming $600 billion "fiscal cliff" of tax increases and?spending cuts that could throw the economy into reverse in the new year if Congress doesn't?do something about?it.
The Fed's policy-setting committee?will meet next week to gauge the health of the economy ahead of?crucial employment data due out next Friday. The unemployment rate has stubbornly remained above 8 percent?while the economy has barely?created enough jobs for the past few months to stay ahead of the expansion of the work force, much less put a dent in the jobless rate.
The Fed may wait, however, until?it sees a few more weeks of data before it acts.
The steps it may take include a new round of asset purchases, or so-called QE3 (for quantitative easing). But Reuters reports that the Fed may also be considering?other steps to replenish its?dwindling toolkit.
Two principal options have emerged as eligible candidates: following the Bank of England's lead in some sort of "funding for lending" plan that favors banks that are actively making loans; lowering the rate the central bank pays financial institutions for parking their reserves at the Fed, currently at 0.25 percent.
The search for new tools is in part a response to the severe negative reaction the Fed received both at home and abroad from its second round of bond purchases.?
"Funding for lending might be a more prudent approach than just buying up securities without any strings attached," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management Group.
In response to the financial crisis and deep recession of 2007-2009, the Fed cut official borrowing costs to effectively zero and bought some $2.3 trillion in mortgage and Treasury securities in an effort to keep long-term rates down and boost economic activity.
A recent Reuters poll of U.S. primary dealers, banks that do business directly with the Fed, found that 70 percent expect another round of stimulus via bond buys. But yields on Treasuries are at or near record lows, casting doubt on what good yet more purchases can bring.?
Reuters contributed to this report.
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