Minutes of the Fed's closed-door meeting on Dec. 15-16 revealed that a "few members" thought that the Fed's $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac might need to be expanded and extended beyond its end date of March 31. Such an additional dose of stimulus would be especially needed if the economic recovery were to weaken, they argued.
However, one member thought the program could be "scaled back" given the improvement in economic conditions.
At the December meeting, Fed policymakers decided not to make any changes to the program. At their September meeting, they opted to slow the pace of the purchases, wrapping them up by the end of March, rather than the end of 2009.
The minutes don't identify speakers by name but seeks to provide a more detailed account of the Fed's private discussions.
Some Fed officials remained concerned about the economy's ability to mount a self-sustaining recovery once government supports are removed. To that end, those officials worried that improvements seen in the housing market might be "undercut" this year as the Fed's mortgage-buying program winds down, the government's home buyer tax credits expire at the end of April and home foreclosures grow.
"Generally the outlook was for gains in housing activity to continue. However, some participants still viewed the improved outlook as quite tentative and again pointed to potential sources of softness," the minutes said.
To nurture the recovery, the Fed at the December meeting kept its key bank lending rate at a record low near zero and pledged to hold it there for an "extended period."
Economists said the Fed is all but certain to leave rates at record lows at its next meeting on Jan. 26-27 and probably for much of this year.