The Federal Reserve’s decision last month to plow $1.2 trillion into the economy reflected growing concerns about a vicious economic cycle in which rising unemployment will curtail consumer spending, potentially into 2010.
Documents released Wednesday provided insight into the Fed’s decision to buy long-term government debt and boost purchases of mortgage-backed securities from Fannie Mae and Freddie Mac.
“Most participants viewed downside risks as predominating in the near term,” according to minutes of the Fed’s closed-door meeting last month.
And with the economy likely to stay fragile, the unemployment rate — now at 8.5 percent — will probably “rise more steeply into early next year before flattening out at a high level over the rest of the year,” the minutes said.
