Fissures are developing among policymakers at the Federal Reserve as they debate how and when to start raising the benchmark interest rate from its current level just above zero.
With Fed officials forecasting that unemployment will average 9.8 percent in 2010, nobody appears to be arguing that monetary policy should be tightened anytime soon. The central bank's official mantra continues to be that the overnight federal funds rate will remain "exceptionally low" for "an extended period."
But Fed officials have hinted at new disagreement in recent weeks.
The arguments go beyond the traditional split between hawks, who worry that easy money stokes inflation, and doves, who contend that unemployment is the top problem.
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Beyond raising the overnight federal funds rate, the Fed also has to unwind $2 trillion in programs that prop up paralyzed banks and credit markets.
Ben Bernanke, the Fed chairman, assured economists this week that the central bank had a detailed list of tools to reverse course but offered no new hint of when he planned to begin his exit strategy.
"When the economic outlook has improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration," Bernanke promised.
Bernanke and others have warned that the central bank should not repeat its error in 1937, when it raised interest rates too early and helped extend the Depression for several years.
At the same time, officials at the Fed are acutely aware that it has been widely blamed for contributing to the housing bubble and the financial collapse by keeping the cost of borrowing too low for too long after the recession of 2001.
Richard Fisher, president of the Federal Reserve Bank of Dallas, said in a speech Sept. 29, "That wind-down process needs to begin as soon as there are convincing signs that economic growth is gaining traction."
Fed officials with similar views include Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, Va., which covers South Carolina; Charles I. Plosser, president of the Philadelphia Fed; and Kevin M. Warsh, an influential Fed governor.
By contrast, some Fed officials in Washington and New York have repeatedly emphasized that the economy is still extremely weak and that unemployment, already at its highest since the early 1980s, will probably climb above 10 percent and remain high for several years.