Federal Reserve officials were worried about an adverse market reaction when they made their first tentative moves in 2013 to pull back on the massive support they had been providing to help the economy recover from the Great Recession.
Transcripts of their discussions released Friday show that then-Federal Reserve Chairman Ben Bernanke and his colleagues devoted considerable time debating the wording of the statement. The Fed ended up approving a proposal to trim its $85 billion per month in bond purchases by a small $10 billion.
Both of Bernanke’s successors as Fed leader, Janet Yellen and Jerome Powell, backed Bernanke’s proposal with Yellen saying “existential angst” over the decision was unavoidable.
The markets had reacted badly six months earlier when Bernanke had first raised the idea of cutting bond purchases.