by Calculated Risk on 8/23/2010 08:55:00 PM

Jon Hilsenrath at the WSJ discusses the debate at the August FOMC meeting: Fed Split on Move to Bolster Sluggish Economy

A few key points:

There is a clear split on the FOMC between those who want the Fed to be more aggressive - because of the high unemployment rate and low inflation - and those that want to take no further action.

Because of low mortgage rates and more refinancing, the NY Fed projected that the balance sheet would shrink by almost $400 billion by the end of 2011 if they Fed did nothing. Earlier this year the estimate was $200 billion.

According to Hilsenrath, Bernanke "is determined to avoid mistakes of past central bankers that created devastating bouts of deflation". And that probably means QE2 - it is probably just a matter of when and how long the FOMC waits.

Note: Existing home sales will be reported tomorrow morning. Don't miss Lawler's Existing Home Sales: “Consensus” vs. Likely for a preview!