The US Federal Reserve was confident unemployment would continue to fall even if it cut its huge monetary stimulus, according to the minutes released Wednesday of the December policy meeting.
Job seekers sit at computers looking for jobs available at a Workforce One Employment Solutions center on January 7, 2014 in North Miami, Florida
"Most members agreed that the cumulative improvement in labor market conditions and the likelihood that the improvement would be sustained indicated that the Committee could appropriately begin to slow the pace of its asset purchases at the meeting," said the minutes of the Federal Open Market Committee's December 17-18 meeting.
"Most had become more confident" that labor market conditions would continue to improve, the document said.
The panel voted 9-1 to begin tapering the massive stimulus in January, reducing the central bank's asset purchases by $10 billion to $75 billion a month.
Some participants, however, expressed concern about slowing the pace of purchases when inflation was running well below the Fed's objective and "considerable slack" remained in the labor market.
Many participants said the Fed "should proceed cautiously" in reducing the easy-money program that has kept long-term interest rates low, supporting growth and fueling stock market gains.
Some favored a larger reduction in purchases at the December meeting and future reductions that would bring the program to an end "relatively quickly."
Paul Edelstein of IHS Global Insight said the Fed minutes showed that while the outlook for the economy had not materially improved, "confidence in that outlook did," allowing most of the officials to support the taper.
"We continue to expect the Fed to slow its purchases by $10 billion per meeting, and to end the program by the end of the year. It won't raise interest rates until late in 2015," Edelstein said.
According to the minutes, "some" participants expressed concern about the possibility of an "unintended tightening" of financial conditions if the taper was misinterpreted as a sign the Fed would likely withdraw accommodative policy support more quickly than had been expected.
Since the prior FOMC meeting in October, the Fed saw the US unemployment rate drop from 7.3 percent to a five-year low of 7.0 percent, and solid job creation that added 203,000 net new positions in November.
In viewing the US economy since the October meeting, Fed officials said risks to the outlook for economy and the labor market had become "more nearly balanced," in part the result of an easing of fiscal policy concerns and improving prospects for global economic growth.
Participants decided that, supported by "appropriate" policy accommodation, economic growth would strengthen and the jobless rate would decline toward levels it considers consistent with its dual mandate of maximum employment and price stability.
Members agreed that though inflation was running "noticeably" below the Fed's 2.0 percent longer-term objective, at 0.9 percent in November, over time inflation could return to the objective.
Because of concerns about the persistence of low inflation, "many" members said the Committee should "monitor inflation developments carefully for evidence that inflation was moving back toward its longer-run objective."
The participants stressed the need to emphasize that the pace of the reduction in asset purchases remained dependent on the panel's outlook for the job market and inflation as well as the effectiveness and costs of the program.
In discussing forward guidance about the Fed's key federal funds rate, which has been near zero for five years, a few members suggested lowering the unemployment threshold to 6.0 percent from 6.5 percent for a rate hike.
But that was overruled by "most" members who preferred no change and instead wanted the Fed to provide "qualitative" guidance on the labor market indicators being assessed after the threshold is crossed.
The next meeting of the FOMC, on January 28-29, will be the last for Fed Chairman Ben Bernanke, whose eight-year tenure ends on January 31. Janet Yellen, the Fed vice chair and a solid supporter of the current monetary policy, succeeds him on February 1, the first woman to lead the central bank.