The U.S. Federal Reserve saw modest improvements in the economic outlook at its April meeting, but mulled increasing purchases of mortgage agency and government securities to give the recovery an additional push, minutes of the meeting showed on Wednesday.

Some members noted that a further increase in the total amount of purchases might well be warranted at some point to spur a more rapid pace of recovery, minutes of the April 28-29 meeting said.

All members concurred with waiting to see how the economy and financial conditions respond to the policy actions already in train before deciding whether to adjust the size or timing of asset purchases, the Fed said.

In April, the Fed held its target for benchmark interest rates unchanged at close to zero and took no other actions to boost the amount of money in the economy by increasing the size of its balance sheet.

The Fed in March shocked financial markets by expanding purchases of mortgage agency securities and debt to a total of $1.45 trillion this year and pledging to buy $300 billion of longer-term Treasury securities over the next six months. The U.S. central bank cut rates to near zero in December as part of an aggressive campaign to reverse the longest recession in decades.

In April, policy-makers saw tentative evidence that the severe contraction was beginning to fade with a pickup in household and business confidence helping to steady spending.

While inflation looked to remain subdued, many at the meeting felt the danger the U.S. would suffer a Japan-style deflation of widespread and lasting price declines had diminished.

(Reporting by Mark Felsenthal and Alister Bull; Editing by Chizu Nomiyama)

Inflation