The Federal Open Market Committee members' views on monetary policy aren't as unified as their June statement implied. In the meeting minutes (.pdf) released today, it's pretty clear that there is considerable disagreement on how the various parts of the economy may fare and what actions should be taken. Three parts of their discussions make this pretty clear.
Economic Projections Worsen
First, their economic projections worsened since April, so this is more a case of the economists disagreeing with themselves. They now believe that the recovery is moving a little more slowly than they expected. As a result, they think unemployment will remain a little bit higher, GDP growth will be a little bit weaker, and inflation will be a little bit lower:
Inflation, Deflation, or Stability?
Speaking of inflation in particular, there's fairly significant disagreement about the path prices are on. Some of the economists worry about deflation, while another (Kansas City President Thomas Hoenig) was so concerned with inflation that he dissented altogether. Here's an excerpt:
Some participants judged the risks to the outlook for inflation as tilted to the downside, particularly in the near term, in light of the large amount of resource slack already prevailing in the economy, the significant downside risks to the outlook for real activity, and the possibility that inflation expectations could begin to decline in response to low actual inflation. A few participants cited some risk of deflation. Other participants, however, thought that inflation was unlikely to fall appreciably further given the stability of inflation expectations in recent years and very accommodative monetary policy. Over the medium term, participants saw both upside and downside risks to inflation. Several participants noted that a continuation of lower than-expected inflation and high unemployment could eventually lead to a downward movement in inflation expectations that would reinforce disinflationary pressures. By contrast, a few participants noted the possibility that a potentially unsustainable fiscal position and the size of the Federal Reserve's balance sheet could boost inflation expectations and actual inflation over time.
Asset Sales, Asset Purchases, or Hold?