As Summers’s Odds Rise, Stimulus Easing Is Seen

The jitters even have some analysts betting that a Summers nomination could lead to slower economic growth, less job creation and higher interest rates than if the president named Janet L. Yellen, the Fed’s vice chairwoman.

Businesses raising money and people buying homes and cars all have faced higher interest rates in recent months as the Fed’s campaign to suppress borrowing costs has faltered. The rise in rates reflects optimism that the economy is gaining strength, and an expectation that the Fed will begin to pull back later this year. But a wide range of financial analysts also see evidence of a Summers effect.

Many investors expected that Ms. Yellen would be nominated to replace Ben S. Bernanke as head of the central bank, a choice that would have sent a clear message of continuity. Instead, investors are now trying to anticipate how Mr. Summers might change the Fed.

The unease is the product of a little information and a lot of speculation. Mr. Summers, a Harvard University economist who served for two years as Mr. Obama’s primary economic adviser, has said little about monetary policy in recent years. Investors are left parsing a handful of comments in which he has expressed some doubts on the benefits and concern about the consequences of the Fed’s policies.

“People don’t know what Larry might do,” said Mohamed El-Erian, chief executive of Pimco, the giant bond fund manager. “There’s a lack of a lot of information on Larry’s views. We don’t have enough information to make an assessment, just some second- and thirdhand accounts.”

Some doubts always attend the arrival of a new Fed chairman, but the consequences are particularly freighted at the moment because the Fed’s effectiveness increasingly depends on its ability to reduce uncertainty among investors. The central bank floored its traditional gas pedal five years ago when it pushed short-term interest rates to zero. It has since focused on further reducing long-term interest rates — which determine the cost of most kinds of borrowing — largely by convincing investors that short-term rates will remain near zero.

The sense of uncertainty is heightened by the fact that as many as five of the Fed’s seven governors may be replaced in the next year.

One governor, Elizabeth A. Duke, stepped down at the end of August. A second governor, Sarah Bloom Raskin, has been nominated to serve as deputy Treasury secretary. Mr. Bernanke’s term ends in January, as does the term of a fourth governor, Jerome H. Powell — although Mr. Obama could choose to reappoint Mr. Powell, a Republican who joined the Fed only in May last year and is said to be open to a longer stay. If Ms. Yellen is passed over by Mr. Obama, she, too, could choose to leave even before her term as vice chairwoman ends in October 2014.

Mr. Obama said last month that he would not announce his choice for the Fed’s top spot until the fall, and that he was considering at least three candidates: Mr. Summers, Ms. Yellen and the former Fed vice chairman Donald L. Kohn. But the president’s top economic advisers uniformly support the selection of Mr. Summers. They regard him as a creative thinker and an experienced crisis manager, qualities they value in particular because they expect the Fed may confront difficult choices as it begins to retreat from its six-year-old stimulus campaign.

They also insist that Mr. Summers supports the Fed’s efforts to revive the economy and would continue those efforts.

But Mr. Summers has criticized the Fed’s purchases of Treasury securities and mortgage-backed securities, warning that bond-buying on such a scale could distort financial markets. He said it was “less efficacious for the real economy than most people suppose.” As a result, many investors suspect he would seek to end those purchases more quickly than Ms. Yellen.

Julia Coronado, chief North America economist at BNP Paribas, said last week that the yield on the benchmark 10-year Treasury note already had started to rise as investors price in a Summers nomination. She added that the yield could eventually rise half a percentage point more than if the president nominated Ms. Yellen instead. Ms. Coronado estimated that this Summers effect would reduce domestic economic growth by 0.5 to 0.75 percentage point over the next two years, which could reduce job creation by 350,000 to 500,000 jobs.

A Summers nomination, she wrote, “would come at a cost of higher market volatility and interest rates, and a less buoyant economic recovery.”

Leadership changes at the Fed tend to unsettle financial markets more than changes in leadership at other major central banks, according to a 2007 study by Kenneth N. Kuttner, an economist at Williams College, and Adam S. Posen, president of the Peterson Institute for International Economics. That is partly because the Fed is the closest thing to a global central bank. But it also reflects the outsize role of the Fed chairman, who is less constrained than other central bankers in making policy.

Mr. Bernanke has sought to reduce the chairman’s role, most notably by adopting a 2 percent inflation objective. The Fed also has sought to lock in the course of near-term policy by announcing its intent to hold short-term rates near zero at least as long as the unemployment rate remains above 6.5 percent. But Mr. Posen said that the market turbulence of recent months showed that investors still thought the choice of chairman would determine the course of policy. “This is one of the reasons I don’t believe that forward guidance works,” he wrote in an e-mail, referring to the Fed’s declaration of intentions regarding short-term rates. “There is no way it can be binding on a new chairperson.”

Historically, new Fed chairmen have been able to settle the doubts of investors by acting quickly after taking office.

In the week after President George W. Bush announced Mr. Bernanke’s nomination in October 2005, the yield on the 10-year Treasury note rose to 4.57 percent from 4.39 percent as buyers demanded increased compensation against the risk of higher inflation. Bond yields also rose after Alan Greenspan was nominated as Fed chairman in 1987. Both men moved almost immediately to raise interest rates and bond yields receded.

But Mr. Summers would have no comparable opportunity. The most obvious way to show his commitment to the Fed’s stimulus campaign, at least in the short term, would be to do nothing. “The only thing he can do,” said Ms. Coronado, “is to show more patience.”

Tapering of Stimulus Could Start as Soon as September, 2 Fed Presidents Hint

Charles L. Evans, the president of the Federal Reserve Bank of Chicago, said he would not rule out the possibility that the Fed could start tapering as early as next month.

The remarks came at a breakfast with reporters in Chicago and echoed through the markets during the day, because Mr. Evans is a voting member of the Federal Open Market Committee, which sets Fed policy, and because he has generally supported more aggressive efforts to stimulate the economy in the past.

In a separate interview with Market News International, the president of the Federal Reserve Bank of Atlanta, Dennis P. Lockhart, also indicated a September move was an option. Mr. Lockhart is not a voting member of the committee, however, so his comments carry a bit less weight than those of Mr. Evans.

On Wall Street, which has benefited from the Fed’s accommodative stance, stocks dropped after the comments, and major market indexes closed lower by a little more than half a percentage point.

The Fed and its chairman, Ben S. Bernanke, have signaled that the central bank’s policy of buying $85 billion a month in government bonds and mortgage-backed securities will be wound down if the economy improves further and unemployment continues to fall.

Mr. Bernanke has said he envisions the stimulus program coming to an end by the middle of next year if unemployment falls to about 7 percent. Last Friday, the Labor Department reported that unemployment in July fell to 7.4 percent, from 7.6 percent in June.

Mr. Bernanke has not said, however, when the tapering will begin, only that the speed and timing of any easing is contingent upon continued signs of strength in the economy.

Traders and economists expect bond purchases to be reduced before the end of 2013, but opinion is divided about whether that will start as early as next month, or come as late as December.

The Fed’s ultimate decision will have wide-reaching impact. The Fed’s aggressive bond buying has helped keep long-term interests rates low; mortgage rates have risen by roughly a full percentage point since Mr. Bernanke first raised the possibility of tapering in May. In addition, the stimulus has also helped prop up the big rally on Wall Street.

While the remarks by Mr. Evans and Mr. Lockhart on Tuesday did not resolve the debate, their tone suggested that tapering was indeed on the horizon if the economy held up.

“Adjustments to asset purchases are going to be conditional on our outlook materializing,” Mr. Evans said. “It’s going to be data-dependent.”

“I do expect though that the outlook will materialize, and we are quite likely to reduce the flow purchase rate starting later this year — couldn’t tell you which month that will be — and it’s likely to wind down, over time, in a couple or a few stages,” he said.

In terms of September, Mr. Evans said, “I clearly would not rule it out, it’s going to depend on the data — the data have been not so bad.”

For his part, Mr. Lockhart, the Atlanta Fed president, also said there was plenty of wiggle room for the central bank, depending on how economic growth shaped up over the coming months.

If growth turns out to be weaker than expected, he said, a reduction in stimulus efforts could be put off.

“If we see a deterioration from this point, and I would say my more realistic fear is just a kind of ambiguous picture of mixed data that signal neither accelerating strength nor necessarily deterioration, but that kind of moping along in the middle, then I think it’s not a foregone conclusion that the asset purchase program should be removed or removed rapidly,” he said.

Dean Maki, chief United States economist at Barclays, said: “Neither Fed president was willing to commit to September nor rule it out. What this is telling us is the F.O.M.C. is keeping its options open and awaiting further data.”

Fed Outlines Timeline for Winding Down Stimulus

Mr. Bernanke said that the Fed planned to continue the asset purchases until the unemployment rate fell to about 7 percent, the first time that the Fed has specified an economic objective for the bond-buying. The rate stood at 7.6 percent in May.

The Federal Reserve also struck notes of greater optimism about the economic recovery, saying in a statement released after a two-day meeting of its policy-making committee that the economy was expanding “at a moderate pace,” the job market was improving and risks to the recovery had “diminished since last fall.”

In a separate forecast released at the same time, Fed officials predicted that the unemployment rate would decline more quickly than they had previously expected, falling to 6.5 percent to 6.8 percent by the end of 2014. They had predicted in March that the rate would be 6.7 percent to 7 percent.

Stocks fell on Wall Street after Mr. Bernanke’s remarks, with the Dow Jones industrial average ending down 1.4 percent, or more than 200 points. The broader Standard & Poor’s 500-stock index also lost 1.4 percent. Investors sold on his indications that the Fed would reduce its stimulus efforts starting later this year.

The Fed said that it would continue for now to purchase $85 billion a month in Treasury securities and mortgage-backed securities, in addition to holding short-term interest rates near zero. Both policies are intended to ease financial conditions, to encourage economic activity and to increase the pace of job creation.

Two of the 12 members of the Federal Open Market Committee dissented from the decision. Esther George, president of the Federal Reserve Bank of Kansas City, reiterated her concern that the Fed was doing too much. James Bullard, president of the Federal Reserve Bank of St. Louis, broke with the majority for the first time this year, expressing concern about the sagging pace of inflation.

The improved outlook helps to explain why Fed officials have increasingly suggested that they may seek to reduce the pace of asset purchases in the coming months. The Fed has said that it will stop buying bonds well before it begins to raise interest rates.

While the vast majority of the 19 Fed officials who participate in policy continue to expect a first rate increase in 2015, 13 said they expected the Fed to raise its benchmark short-term rate at least to 1 percent by the end of 2015, implying that increases would begin relatively early in the year. In March, only 10 officials forecast that rates would hit 1 percent by the end of 2015.

The Fed’s forecasts have consistently overestimated the strength of the economic recovery since the end of the recession. The central bank has suspended its stimulus efforts twice in recent years, only to find that it needed to do more. Officials have said that they are eager to avoid repeating those mistakes. But there is growing optimism inside the central bank that the Fed is finally doing enough.

The Fed is trying to encourage job creation through a loose monetary policy, holding short-term interest rates near zero and purchasing $85 billion a month in mortgage-backed securities and Treasury securities.

Economic conditions have improved modestly since the Fed began this latest round of asset purchases last September. The economy has added about 197,000 jobs a month, on average, and the unemployment rate has fallen slightly to 7.6 percent in May from 7.8 percent in September. The impact of federal spending cuts so far has been smaller than many forecasters, including the Fed, had expected.

But the economic damage of the recession remains largely unrepaired. Job growth is basically just keeping pace with population growth. The share of American adults with jobs has not increased in three years. At the same time, the Fed’s preferred measure of inflation has sagged to an annual pace 1.05 percent, the lowest level in more than 50 years, as the economy continues to operate below capacity.

Markets Rise on Thought That Fed Will Continue Stimulus

Investors are in a game of wait-and-see with the Federal Reserve. On Monday, they sent stocks higher as they guessed that the Fed would continue trying to prop up the economy.

The major stock indexes all rose about 1 percent in early trading and stayed there for most of the day before dipping slightly in the afternoon. The Standard & Poor’s 500-stock index rose 12.31 points, or 0.8 percent, to 1,639.04. It had been up as much as 20 points.

The market’s gains were broad. Telecommunications was the only one of the 10 industry sectors in the S.& P. 500 to post a loss. Netflix did better than any other stock in the S.& P. 500 after announcing that it would run original TV series from DreamWorks Animation.

There were few big company announcements or economic reports, and trading was light. Investors will have to keep guessing about the Fed’s future actions until Wednesday, when the chairman, Ben S. Bernanke, holds a news conference at the end of a two-day policy meeting.

Investors sent stocks up Monday because they think Fed policy makers will determine that the economy is not recovering fast enough. A still-weak economy would influence the Fed to continue its programs intended to stimulate the economy: keeping interest rates low to encourage borrowing, and buying bonds to push investors into stocks.

Doug Lockwood, branch president of Hefty Wealth Partners in Auburn, Ind., said it was not rational for the stock market to regard bad news as good, and to be yanked back and forth more by the actions of a central bank than the underlying fundamentals of the economy.

The market has been in flux since May 22, when Mr. Bernanke said that the Fed would consider pulling back on its bond-buying program if measures of the economy, especially hiring, improve. The comment, made in response to a question from the Joint Economic Committee in Congress, was not expected. In the 17 trading days since then, the Dow Jones industrial average has swung by triple digits 11 times.

On Monday, the Dow rose 109.67 points, or 0.7 percent, to 15,179.85. The Nasdaq composite rose 28.58, or 0.8 percent, to 3,452.13.

The price of crude oil rose throughout the day but ended 4 cents lower at $98.03 a barrel in New York. Gold edged down $4.50 to $1,383.10 an ounce.

In the market for government bonds, the benchmark 10-year Treasury note fell 13/32 to 96 7/32, bringing the yield up to 2.18 percent from 2.13 percent late Friday.

Jim McDonald, chief investment strategist at Northern Trust in Chicago, said Mr. Bernanke would seek to “walk back” on some of his previous comments, and reassure investors that the Fed will not pull back on stimulus until it is sure the economy is ready. The surprise factor, more than the substance of Mr. Bernanke’s comments, might have been what unnerved investors, McDonald said.

The fact that Mr. Bernanke is now expected to regard the economy as still weak enough to need stimulus stems from a jobs report and low inflation since his testimony, analysts said.

This month, the government reported that the United States added 175,000 jobs in May — not enough to cut into the unemployment rate. And on Friday, the government said that a crucial measure of inflation — the producer price index, which measures wholesale prices — rose just 0.1 percent after stripping out the volatile costs of food and gas. That is important because the Fed knows that its stimulus measures can stoke inflation; if inflation is low, the central bank has more flexibility to keep pumping money into the economy.

Two measures of economic data released on Monday were positive, though both are considered less important gauges of the economy. A report on manufacturing in New York State showed a pickup, and a survey of American home builders said they were more optimistic about sales than they had been in seven years.

Fed Stimulus Still Needed to Help Recovery, Bernanke Says

While acknowledging the risks of historically low interest rates and the Fed’s aggressive policy of buying government bonds to help stimulate the economy, Mr. Bernanke said in testimony that “a premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.”

After his opening statement, however, Mr. Bernanke seemingly opened the door a bit wider to tapering down.

Under questioning by Representative Kevin Brady, a Texas Republican who chairs the Joint Economic Committee, Mr. Bernanke said the Fed could prepare to “take a step down” in the next few meetings if the outlook for the labor market improved.

“It’s dependent on the data,” he said. “If the outlook for the labor market improves, we would respond to that.”

Mr. Brady asked if the tapering could begin before Labor Day, prompting Mr. Bernanke to say, “I don’t know.”

“We are buying a certain amount of assets each month,” he continued. “We are looking for increased confidence and in steps respond to that.”

According to a summary of the Fed’s last Open Market Committee meeting released Wednesday afternoon, Fed policy makers were still tentative about dialing back on their efforts to boost growth at their session on April 30 and May 1.

“A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth,” the minutes of the meeting stated. However, views differed on just what that evidence would be and whether a tapering was indeed likely.

While “a few members expressed concerns that investor expectations of the cumulative size of the asset purchase program appeared to have increased somewhat since it was launched last September,” others members of the panel were less convinced, according to the minutes.

“In contrast, a few other members focused on evidence that market expectations about the total size of the program had changed little,” the record showed.

While there was no clear consensus on policy, most members agreed on the need “to communicate clearly that the pace and ultimate size of its asset purchases,” would depend on outlook for the economy, a stance echoed by Mr. Bernanke in his testimony earlier the day.

In his opening statement, Mr. Bernanke said that since last summer, “financial conditions in the euro area have improved somewhat,” helping lessen the headwinds faced by the American economy as well.

He noted that the federal government’s fiscal policy had become “significantly more restrictive,” even as the Fed had pursued a looser monetary policy. The expiration of the payroll tax reduction in January and tax increases, as well as automatic spending cuts imposed by Congress and lower military spending, will collectively “exert a substantial drag on the economy this year.”

Speculation had been rising in recent weeks that the Fed might be preparing to taper its bond purchases, which total $85 billion a month. The bond-buying program has been credited with increasing growth, but some observers worry it could create a bubble in the prices of assets like stocks.

At its most recent meeting this month, the Fed said it was “prepared to increase or reduce the pace of its asset purchases,” prompting some analysts to speculate that bond purchases might be reduced in the coming months.

“In considering whether a recalibration of the pace of its purchases is warranted,” Mr. Bernanke told the Joint Economic Committee, the Fed “will continue to assess the degree of progress made toward its objectives in light of incoming information.”

Stocks on Wall Street surged after Mr. Bernanke’s remarks but pulled back in afternoon trading.

This article has been revised to reflect the following correction:

Correction: May 22, 2013

An earlier version of this article incorrectly described the timing given by Mr. Bernanke of a potential Fed move. He said the Fed could prepare to “take a step down” in the next few meetings, not the next few weeks.

This article has been revised to reflect the following correction:

Correction: May 22, 2013

Fed Stands By Stimulus, and Says It’s Open to More

The Fed emphasized that it was ready to increase or decrease its efforts to spur growth and reduce unemployment as necessary, a more balanced position than it took earlier in the year, reflecting the reality that a strong winter has once again yielded to a disappointing spring.

It was the first time that the Fed had explicitly mentioned the possibility of doing more in a policy statement, although officials, including the Fed’s chairman, Ben S. Bernanke, have made the point repeatedly in public remarks.

Analysts disagreed about the central bank’s intent. Some saw it as a signal that the Fed’s next move could be an expansion of its stimulus.

Others, however, said the Fed was simply underscoring that it did not plan to reduce its asset purchases. It is buying $85 billion a month in Treasury and mortgage-backed securities.

“I don’t think there’s much chance of them stepping it up,” said Jim O’Sullivan, chief United States economist at High Frequency Economics in New York. “But this is certainly their way of saying there’s no bias toward scaling down.”

The Fed maintained a relatively sunny economic outlook in its statement, released after a two-day meeting of its policy-making committee. It said that the economy was expanding at a “moderate pace” and that the labor market had shown “some improvement.” It added, however, that federal spending cuts were “restraining economic growth,” an implicit critique of the rest of the government.

That language was stronger than the Fed had used in previous assessments of the economic impact of fiscal policy. Fed officials have repeatedly expressed frustration that fiscal policy is working at cross-purposes with their own monetary policy. The statement also noted that the pace of inflation had slackened, a potential sign of economic weakness. Bringing the annual rate of inflation closer to its target of 2 percent has been a primary goal of the Fed’s four-year-old stimulus campaign, but the statement expressed little concern about the recent deceleration to a pace of only about half that level.

Investors and the Fed have taken the view that inflation is likely to return to a more normal pace without additional effort.

“The committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline” to a level the Fed regards as acceptable, the statement said.

Michael Feroli, chief United States economist at JPMorgan Chase, said the stability of the Fed’s economic outlook suggested that policy, too, would remain stable.

“In effect, the Fed signaled that the pace of asset purchases would be data dependent in both directions, but that right now the data gives them little reason to change in either direction,” Mr. Feroli wrote Wednesday in a note to clients.

The statement won support from 11 of the Federal Open Market Committee’s 12 members. Esther George, the president of the Federal Reserve Bank of Kansas City, cast the dissenting vote, as she has at each meeting this year, citing concerns about potential “economic and financial imbalances” and the risk of excessive inflation.

The pace of economic growth appeared to slow in the weeks between the Fed’s previous meeting and the one this week. Inflation slackened in March to the slowest pace in two years, while employers added the fewest jobs in any month since last summer. And economists say that the pain of federal spending cuts is just beginning to tell.

Inflation was 1.1 percent during the 12 months ending in March, according to the most recent data from the Fed’s preferred inflation gauge, the Commerce Department’s index of personal consumption expenditures. That is well below the 2 percent annual pace that the Fed considers healthy.

The share of Americans with jobs has not increased since the recession.

Economix Blog: Bernanke Defends Stimulus as Necessary and Effective

The Federal Reserve’s chairman, Ben S. Bernanke, picked an unusual time to offer his most recent defense of the Fed’s campaign to stimulate the economy: 7 p.m. on a Friday night in San Francisco, 10 p.m. back home on the East Coast.

The basic message was the same as Mr. Bernanke delivered to Congress earlier this week: The Fed regards its current efforts as necessary and effective, and the risks, while real, are under control.

“Commentators have raised two broad concerns surrounding the outlook for long-term rates,” Mr. Bernanke told a conference at the Federal Reserve Bank of San Francisco. “To oversimplify, the first risk is that rates will remain low, and the second is that they will not.”

If rates remain low, it may drive investors to take excessive risks. If rates jump, investors could lose money – not least the Fed.

Regarding the first possibility, Mr. Bernanke said that the Fed was keeping a careful eye on financial markets. But he noted that rates were low in large part because the economy was weak, and that keeping rates low was the best way to encourage stronger growth. “Premature rate increases would carry a high risk of short-circuiting the recovery, possibly leading — ironically enough — to an even longer period of low long- term rates,” he said.

At the other extreme, Mr. Bernanke said the Fed could “mitigate” any jump in rates by prolonging its efforts to hold rates down, for example by keeping some of its investments in Treasury and mortgage-backed securities.

Three more highlights from the question-and-answer session after the speech.

1. Mr. Bernanke, asked about the outlook for the Washington Nationals, responded by accurately quoting the “Las Vegas odds” of a World Series appearance: 8/1.

2. Although the decision may be made under a future chairman, Mr. Bernanke said the Fed should continue to offer “forward guidance” — predicting its policies — even after it concludes its long effort to revive the economy.

“Providing information about the future path of policy could be useful, probably would be useful, under even normal circumstances,” he said in response to a question. “I think we need to keep providing information.”

3. Not surprisingly, Mr. Bernanke often is asked to reflect on the financial crisis. He offered something a little different than his normal response on Friday night.

“In many ways, in retrospect, the crisis was a normal crisis,” he said. “It’s just that the intuitional framework in which it occurred was much more complex.”

In other words, there was a panic, and a run, and a collapse – but rather than a run on bank deposits, the run was in the money markets. Improving the stability of those markets is something regulators have yet to accomplish.

Bank of England Divided on Continuing Stimulus Measures

LONDON — Policymakers at the Bank of England are divided over the future of their multibillion-pound program of bond purchases to stimulate the economy, according to minutes of their discussions released Wednesday, which suggests that prospects for an expansion of the program in the near term may be fading.

With the British economy likely to emerge from recession in the third quarter, but still facing extremely weak growth, many analysts had expected more stimulus in November.

But there is also growing sense that, with interest rates already at a record low, and the jury still out on the impact of the central bank’s asset purchases on the economy, monetary policy is becoming less effective as a means of stimulus.

Instead of central-bank stimulus measures, some economists favor a slowdown in the pace of large government spending cuts intended to cut the country’s budget deficit.

The bank’s policy makers also noted that consumer price inflation was still above the bank’s 2 percent annual target and probably would not decline this year, as had been hoped, because of rising energy and food costs. Economists note that inflation argues against an increase in stimulus, for fear of overheating the economy.

The release of the minutes coincided Wednesday with positive new data on jobs. Britain’s unemployment rate for June to August 2012 was 7.9 percent of the economically active population, down 0.2 percentage points from March to May 2012, according to the Office for National Statistics, an independent agency that prepares data for the government. There were 2.53 million unemployed people, down 50,000 from March to May 2012, the office said.

The record of the October meeting of the central bank’s Monetary Policy Committee showed that there was unanimous agreement to hold interest rates at a record low of 0.5 percent and not to expand the £375 billion, or $600 billion, purchasing plan, known as quantitative easing.

But the minutes also indicate that the debate on what to do at next month’s meeting will be finely balanced.

“There were some differences of view between members about the outlook and the likelihood that further easing in policy would be required,” the minutes said. “But there was agreement that there was little to be gained at this meeting in changing the current program of asset purchases.”

The bank minutes noted that consumer price inflation had fallen to 2.5 percent in August, from 2.6 percent in July, still slightly above the 2 percent target. “But higher oil prices and likely rises in domestic energy prices and some foodstuffs meant that inflation might remain broadly flat over the rest of the year, rather than gently falling as expected,” the minutes said.

Martin Weale, a member of the bank’s monetary policy committee, dampened expectations about more asset purchases last week when he said in an interview with the Daily Mail newspaper that it was “not self-evident” that “substantial extra support for the economy would be compatible with the inflation target.”

His comments, along with the labor report “provided some support for more hawkish members” of the central bank’s policy committee, Neville Hill, director of European economics at Credit Suisse, wrote in a note.

Rob Wood, chief U.K. economist for Berenberg Bank in London, said that the central bank’s position on continuing the stimulus would also depend on other signs of recovery in the economy.

“Productivity will be absolutely critical to the outcome of the committee’s November decision,” Mr. Wood said. “If productivity growth remains weak, there are limits to how much more monetary policy” can do “to boost growth without raising inflationary pressures.”