Vice Chairman Janet Yellen said last week that a third round of large-scale asset purchases "might become appropriate if evolving economic conditions called for significantly greater monetary accommodation." Governor Daniel Tarullo said buying mortgage-backed securities "should move back up toward the top of the list of options."
Policy makers pledged in August to hold the benchmark interest rate near zero through the middle of 2013 so long as joblessness stays high and the inflation outlook is "subdued." On Sept. 21, they announced a plan to replace debt in the central bank's portfolio with longer-term Treasuries to help cut borrowing costs.
Companies also kept a tight rein on stockpiles last quarter, making it less likely that production will have to be cut back. Inventories were rebuilt at a $5.4 billion annual pace, down from the second quarter's $39.1 billion rate. The reduction subtracted 1.1 percentage points from GDP growth.
Excluding inventories, the economy grew at a 3.6 percent annual rate last quarter, up from a 1.6 percent in the April through June period.
A narrower trade deficit contributed 0.2 points to GDP. Government spending stagnated, continuing to restrain growth. A 2 percent gain in federal outlays was offset by a 1.3 percent drop in spending by state and local agencies.
The U.S. economy expanded at an average 0.9 percent rate in the first half of 2011, the worst performance since the recovery began in June 2009. Growth needs to exceed 2.5 percent to reduce the jobless rate, according to estimates by Kurt Karl, chief U.S. economist at Swiss RE in New York.