Several Federal Reserve policymakers were concerned last month about the risks of the Fed's efforts to boost the U.S. economy by keeping borrowing costs low for the foreseeable future.

Minutes, or written records, of the Fed's Jan. 29-30 policy meeting released Wednesday showed that some officials worried about the Fed's monthly purchases of $85 billion in Treasurys and mortgage bonds. They expressed concern that the continued purchases could eventually escalate inflation, unsettle financial markets or cause the Fed to absorb losses once it begins selling its investment holdings.

The U.S. Federal Reserve minutes show some policymakers are concerned about the central bank's monetary policyThe U.S. Federal Reserve minutes show some policymakers are concerned about the central bank's monetary policy ((Cal Woodward/Associated Press))

In the end, the Fed voted last month to keep its bond program open-ended and at the same size. It said in a statement that the bond purchases would continue until the job market improved substantially.

The January minutes suggested that the discussion over the risks from the bond purchases was more extensive than at the Fed's December meeting. Minutes of the December meeting had also pointed to divisions among Fed officials over how long the purchases should continue. The debate within the Fed has fed speculation that the bond purchases might be scaled back or ended altogether this year.

In January, the minutes showed that "several participants" thought the Fed should be ready to vary the pace of its purchases as it adjusts its view of the economy or the benefits and costs of the purchases. The policymakers asked Fed staffers to provide a deeper analysis at upcoming meetings of the issues raised in the discussion.

The Fed is embarked on its third round of bond purchases. Unlike the previous rounds, the latest effort is open-ended: The Fed has said it will keep buying bonds until it sees substantial improvement in the job market. It also plans to keep a key short-term interest rate at a record low at least until the unemployment rate falls below 6.5 per cent. The rate is now 7.9 per cent.

The minutes noted that officials thought the economy was showing signs of modest improvement at the start of 2013. Policymakers observed that the job market had been improving gradually and that super-low interest rates had helped boost sales of autos and other consumer products.

But Fed officials also cautioned that threats remained. They pointed to possible economic disruptions from budget debates in Washington, including the scheduled start of across-the-board spending cuts on March 1 – cuts that could slow the economy's growth.