NEW YORK (CNNMoney.com) -- The Federal Reserve appears ready to take additional steps soon to try to jump start the economy, but there is sharp disagreement among policymakers on the best course of action.
Minutes of its Sept. 21 meeting of the Federal Open Market Committee appeared to lay the groundwork to take action, possibly as soon as its next meeting on Nov. 2 and 3.
"Several members noted that unless the pace of economic recovery strengthened or underlying inflation [rose] ....they would consider it appropriate to take action soon," according to the minutes.
But it is also clear that there is not unanimity among the policymakers. While some felt that the continued sluggish growth of the current recovery justified action, others said they would support such a move only if "the outlook worsened and the odds of deflation increased materially."
The central bank can no longer employ its usual tool to bolster the economy -- lower interest rates -- since the fed funds rate is already near 0%, and has been since December 2008.
But the Fed could resume purchases of assets such as long-term Treasurys, a policy known as quantitative easing, which would pump money into the economy and indirectly lower some other rates, such as fixed-rate mortgages and corporate bonds.
Ultimately, the committee voted to keep interest rates near 0%, and to continue to reinvest proceeds from maturing mortgage securities into new Treasurys, a subtle move toward more quantitative easing.
Despite the debate among Fed members, only one member, Kansas City Fed President Thomas Hoenig, formally dissented against the the action.
Experts believe the minutes point to a vote for more asset purchases -- perhaps as much as $500 billion -- announced at the next meeting.
"If this is the direction that [Chairman Ben] Bernanke wants to move, I think he's clearly got the votes," said Keith Hembre, chief economist First American Funds.
But even if there are enough votes for further asset purchases, the dissent among the Fed could keep it from taking really bold steps.
"While the question of 'when' has now been largely settled, the 'how' and the 'why' are still very much up in the air," said Paul Ashworth, senior U.S. economist at Capital Economics.
"The Fed will buy Treasury securities, but in what amount, for how long or until what economic goal is met is unclear," said Ashworth.
The Fed said its staff lowered its projection for economic growth over the second half of 2010, and also reduced slightly its estimate for growth next year, although the exact details of those forecasts were not revealed.
But even with that more bearish outlook, the Fed is not expecting the economy to fall into another recession.
The Fed statement released after the Sept. 21 meeting said the U.S. economic recovery continued to lose steam, and that the Fed was willing to take action as needed to spur the economy.
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