Fed policymakers wanted cautious approach to QE3 taper: minutes

(Reuters) - As the U.S. Federal Reserve's top officials debated their decision to scale back a massive bond-buying stimulus program last month, they were keen to steer a delicate path.

Minutes of the Fed's December 17-18 policy meeting, released on Wednesday, showed many members of the policy-setting Federal Open Market Committee wanted to proceed with caution in trimming the asset purchases, and most wanted to stress that further reductions were not on a preset course.

The U.S. central bank ultimately surprised many investors by deciding at the meeting to cut purchases by $10 billion, bringing them to $75 billion per month, which is still an aggressive effort to clear the way for investment, hiring and economic growth.

Some of the 10 voting policymakers "expressed concern about the potential for an unintended tightening of financial conditions if a reduction in the pace of asset purchases was misinterpreted as signaling that the committee was likely to withdraw policy accommodation more quickly than had been anticipated," the minutes said.

"As a consequence, many members judged that the committee should proceed cautiously in taking its first action to reduce the pace of asset purchases and should indicate that further reductions would be undertaken in measured steps."

They also wanted to stress to the public that further reductions were "not on a preset course" and would depend on progress in the labor market and on inflation, as well as on how well the program was judged to work in the months ahead.

Most members were confident enough in the labor market outlook that they viewed scaling back the program as appropriate, the minutes showed. (Reporting by Jonathan Spicer and Ann Saphir; Editing by Andrea Ricci)