The Fed has kept its key interest rate near zero since late 2008 in an effort to give businesses and consumers cheaper access to credit.
The Federal Reserve’s policymakers are not likely to take any action at the 2 day closed door meeting concluding today, other than to verify that they’ll continue to have a high accommodative policy stance. In its last 2 meetings, the Federal Open Market Committee- FOMC, had decided the economy would remain weak enough to keep the interest unchanged close to zero, through at least late 2014 and leave open the option to ease policy further if the economy worsens. Very little has changed since then. The FOMC policy-setting panel will probably do little more than repeat itself.
Fed Chairman Ben Bernanke said last month, the Economic growth simply hasn’t been strong enough to warrant strong job growth going forward. The unemployment rate slipped to 8.2%, but Bernanke doubts it will keep falling consistently. Economic growth has been just firm enough to weaken the case for additional unconventional stimulus through Fed purchases of government or mortgage bonds. No incentive to start raising interest rates any time soon.
The statement is due around 12:30 p.m. in Washington. At 2 p.m. the Fed will release policy maker’s forecasts for growth, unemployment, inflation and the appropriate path of the federal funds rate over the next several years. Chairman Ben S. Bernanke plans to hold a press conference at 2:15 p.m.
Any indications in the speech, of an earlier rate hike & the stock market faces the risk of a sell-off as it prices out expectations for further monetary easing from the Fed.
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