“I was not in favor of doing more. We have done a lot,” said Ms. George, in remarks in Oklahoma City Tuesday.

“When I look at the economy and think what it is that’s holding back demand” and causing unemployment to remain high, “it does not seem like these are factors conducive to more easing.” Cheaper money, she said, might help with getting credit flowing, but “in today’s setting, I can’t see that that’s the issue.

“So adding to it feels to me like compounding the risk.”

The Committee’s statement also altered the “forward guidance” regarding future monetary policy, stating for the first time that it expected a highly accommodative stance of monetary policy for “a considerable period after the economic recovery strengthens.” I disagreed with this statement because I believe a commitment to provide stimulus beyond the point at which the recovery strengthens and growth increases implies too great a willingness to tolerate higher inflation and would be inconsistent with a balanced approach to the FOMC’s price stability and maximum employment mandates.

Finally, I strongly opposed purchasing additional agency mortgage-backed securities. These purchases are intended to reduce borrowing rates for conforming home mortgages. Such purchases, as compared to purchases of an equivalent amount of U.S. Treasury securities, distort investment allocations and raise interest rates for other borrowers. Channeling the flow of credit to particular economic sectors is an inappropriate role for the Federal Reserve. Central banks abuse their independence when they promote some borrowers at the expense of others. This principle was recognized in the Joint Statement of the Department of Treasury and the Federal Reserve on March 23, 2009: “Government decisions to influence the allocation of credit are the province of the fiscal authorities,” that is, Congress and the administration.

In the absence of further monetary easing, I concluded that growth would remain too subdued over the next several years to make big inroads into the spare capacity that remains from the Great Recession. As a result, unemployment would remain unacceptably high, with economic risks skewed to the downside. Meanwhile, with substantial slack in labor markets and inflation expectations stable, inflation was likely to remain a bit below our 2 per cent longer-run objective.

In this situation, I concluded that our policy framework means that further monetary policy easing was appropriate provided that the benefits of using the tools available outweighed the costs. In my judgment, this standard has been satisfied here. I am confident that the costs are manageable, based in part on the experience we have of using the tools these past four years and that the benefits substantially exceed the costs, recognizing, of course, that our actions are not so powerful that they will instantly transform the economic outlook.

Evans told reporters after the speech that a pace of $85 billion in mortgage-backed securities and Treasury securities may be appropriate into 2013.

“We’re looking for stronger employment growth, some beginning declines in the unemployment rate and stronger growth,” Evans said. “I’d be surprised if we would see enough evidence of that by the end of this year. So under that conditioning, I would expect that we would continue at something like an $85 billion pace of purchases post December.”

The effects [of the latest round of asset purchases] are very hard to gauge, but my sense is that this is going to have a greater effect on inflation and a minimal impact on jobs

The committee has talked about lowering interest rate on excess reserves.  We have gone round and round on this issue. I kind of think this might be a time to try that out.

My current assessment of the both the economy and effectiveness of QE is that I don’t think it really meets the cost-benefit analysis.

When asked about the prospect of a third round of bond buying from the Fed, Lockhart said it was a "close call." However, he laid down a marker for how weak the economy would need to be before the central bank might act.

"If we were to see deterioration from this point, let’s say a persistence of job growth numbers that were well below 100,000 per month, or see signs of disinflation that could signal the onset of deflation, then there wouldn’t be much of a question about policy," Lockhart said.

Now, I do think that the minutes are a bit stale, because we have some data since then that's been somewhat stronger. But I think, you know, the tone of the discussion, to me, anyway, and just my interpretation, was that, gosh, you know, things are not as good as we thought. And if it continues to decelerate here, we're going to have to do something.

...

This would be unusual for the Fed to take really big action based on this data constellation. So just think about where we were last year at this time. Markets were really in turmoil. You know, things were, you know, much worse. Recession probabilities were high last year. Right now recession probabilities probably aren't as high. Measures of financial market turmoil were really high last year. They’re not that high right now. Equity markets down sharply last year at this time.

Now we're looking at all-time highs. European situation in turmoil last year; not good, still a wild card. So I think, you know, interest rates, longer-term interest rates, you know, very low right now. So I think it's a different constellation.

There is a risk to monetary policy being employed too aggressively and without effect to address economic problems that can be resolved only by fiscal reforms that involve making tough choices about the allocation of public resources. Monetary policy can exert a powerful positive influence on an economy, but as Chairman Bernanke has pointed out, monetary policy is not a panacea.

"There's no uncertainty about one thing - there's plenty of cheap high-octane fuel which we the Fed have provided," Fisher said. "What good would it do to put still more out there since what we've already put out there is not having much effect on employment?"

Fisher said further Fed action could actually hurt a recovery already only at stall speed by fueling uncertainty "if people feel we are going too far.

Participants at the June FOMC meeting indicated that they see a higher degree of uncertainty about their forecasts than normal and that the risks to economic growth have increased. I would like to highlight two main sources of risk: The first is the euro-area fiscal and banking crisis; the second is the U.S. fiscal situation.

[T]he possibility that the situation in Europe will worsen further remains a significant risk to the outlook.

[F]iscal decisions should take into account the fragility of the recovery. That recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken.

The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery. Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence.

Reflecting its concerns about the slow pace of progress in reducing unemployment and the downside risks to the economic outlook, the Committee made clear at its June meeting that it is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

[A]s the year has unfolded, my colleagues and I at the Atlanta Fed have recalibrated our risk evaluation. While not fully factored into our baseline outlook, we're acknowledging darker possibilities. Risks associated with developments in Europe, the so-called fiscal cliff here in the United States, and a global economic slowdown have weighed more heavily on our outlook.

All 19 FOMC participants submit forecasts for GDP growth, inflation, and employment four times each year. The central tendency for 2012 GDP growth dropped from a range of 2.4 to 2.9 percent in April to a range of 1.9 to 2.4 percent in June. In my view, this was a rather abrupt and material adjustment to the outlook.

In recognition of this change of outlook, the FOMC decided last month to extend the so-called Operation Twist program until the end of 2012.

It's possible another policy decision looms. My colleagues and I on the FOMC may confront a decision on whether or not to respond more aggressively to the economy's apparent weakness.

I think the stakes in the policy discussion around the FOMC table today are very high.

[M]y support for the current stance of policy rests on a forecast that sees a step-up of output and employment growth by year-end and into 2013. If the economy continues on the track indicated by the most recent incoming data and information, that forecast will become untenable, as will the policy premises underlying it.

It's possible another policy decision looms. My colleagues and I on the FOMC may confront a decision on whether or not to respond more aggressively to the economy's apparent weakness.

[A]mong the many cross-currents and uncertainties facing the U.S. economy, the most important one is the continued uncertainty emanating from the European situation.

"If things slow down a lot more and the U.S. economy looked like either that it was going into recession or that deflation would develop, then I think we could consider more action, but I don't think we are there at this juncture," Bullard told reporters after the conference,

"Twist has been extended through the end of the year, but we are running out of balance sheet. There is a limited amount of short-term Treasuries that we can sell and buy long-term Treasuries. So I don't think you can look at any more extension of Twist beyond the end of the year."