Fed's stimulus plans in focus

Now Reading:

Fed's stimulus plans in focus

Text size Aa Aa

Can we expect more stimulus from the Federal Reserve to counter the weakness of the recovery?

That is the question for financial markets as the US central bank started its two-day policy setting meeting on Tuesday.

The feeling is the Fed won’t – for now – announce any further quantitative easing – effectively printing money to purchase assets, but could extend its long-term bond-buying efforts which have a similar effect.

That programme, known as Operation Twist, might be extended by a few months from the current June deadline.

The Fed appears increasingly likely to offer more monetary stimulus despite political opposition, internal reticence and concerns about whether it will be effective, economists say.

Previous rounds of asset purchases by the central bank, which are intended to drive down interest rates and stimulate the economy, weakened the US dollar, boosted global stock markets and polished the appeal of gold as a hedge against inflation.