Fed set to decide on next course for handling economy - 13 WTHR Indianapolis

Fed set to decide on next course for handling economy

Updated:

Federal Reserve chairman Ben Bernanke will announce the direction interest rates will go today, after a two-day policy meeting.  Investors are watching nervously to see what moves the board takes - or signals it sends about monetary policy through the remainder of the year.


There's broad anticipation that the Fed may move for the first time in many months to slow the pace of the stimulus steps that it has taken since the financial crisis of 2008 and the Great Recession.

But investors also seem to believe the board will move cautiously, perhaps with just a small reduction in its monthly Treasury and mortgage bond purchases. Some say they wouldn't be surprised if the Fed cut the stimulus program by $10 billion, down to $75 billion. The various steps the institution has taken so far have helped keep long-term loan rates ultra-low to encourage borrowing and spending.

The Fed is also expected to stress that while it's slowing its bond purchases, it plans no change anytime soon in its benchmark short-term rate. It has kept that rate at a record low near zero for the past five years. That's the rate which mostly affects rates on business and consumer loans.

 

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