Fed minutes: Policymakers favor tapering this year

• %27Almost all%27 policymakers %27broadly comfortable%27 with tentative plan from Bernanke
• Fed chief had proposed easy-money pullback starting this year and ending by mid-2014
• Central bank is buying %2485B a month in Treasury bonds and mortgage-backed securities

Federal Reserve policymakers appear to be coalescing around a plan to pare back the central bank's massive stimulus this year and end it in mid-2014, but the minutes from its latest meeting give no signal whether it could begin next month.

"Almost all" Fed policymakers said they were "broadly comfortable" with the tentative plan sketched out in June by Fed Chairman Ben Bernanke to taper its bond-buying this year and end it by mid-2014, assuming job growth continues to pick up, according to the minutes of the July 30-31 meeting. The minutes were released Wednesday.

The apparent consensus contrasts with the sharp divisions voiced by Fed officials in the June meeting minutes. At that meeting, about half of policymakers favored ending the bond purchases late this year, while many others wanted to see a further pickup in the labor market.

The Federal Reserve is buying $85 billion a month in Treasury bonds and mortgage-backed securities to hold down long-term interest rates and spur more purchases of homes, cars and factory equipment.

After its July meeting, the Fed released a statement voicing concerns about rising mortgage rates and excessively low inflation, leading some economists to suggest that a reduction in the bond-buying could be delayed beyond September. While the minutes reflect those concerns, they provide no further clarification on when a paring of the purchases could begin.

Fed officials have signaled for months that the bond-buying likely would be scaled back this year, and some recently have suggested a phase-out of the purchases could start in September, assuming solid economic and labor market data. The comments have driven down stocks and pushed up bond yields.

"A few" policymakers suggested last month "that it might soon be time to slow somewhat the pace of the purchases." At the same time, a few others "emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases."

Policymakers noted that federal budget cuts have taken a bigger toll on the economy in the first half of 2013 than they thought, according to the minutes.

Still, several economists said they expect the Fed to begin dialing back the stimulus next month. Barclays Capital noted the minutes reported "a number" of Fed officials said market expectations — which generally reflect tapering in September — "appeared well aligned" with their own.

With officials still divided on when to rein in the stimulus, "officials could opt to start the tapering next month, but begin with a smaller-than-expected initial reduction" of $10 billion, Paul Ashworth of Capital Economics said in a research note.

Meanwhile, the Fed has said it would keep its benchmark interest rate near zero at least until unemployment falls to 6.5% and the inflation outlook stays below 2.5%.

Some analysts have speculated that the Fed could lower its threshold below 6.5% unemployment to reinforce its intention to keep short-term rates very low for an extended period.

Last month, "several" Fed officials "were willing to contemplate" lowering the threshold if additional support for the economy were needed. But a few said such a move could call into question "the credibility of the threshold" and undermine its effectiveness.