Fed expected to keep rates at record low
Policy decision will be announced today
Washington: The Federal Reserve is expected to leave interest rates at a record low this week. The big question is whether Chairman Ben Bernanke and his colleagues will hint about when they will reverse course and start boosting rates.
Plans for reeling in the unprecedented amount of money the Fed has ploughed into the economy to bolster the recovery are likely to have dominated its discussions yesterday, and will continue today.
The Fed is expected to announce its policy decisions this afternoon.
The central bank faces a high-stakes challenge: If it removes the stimulus too soon, it could short-circuit the fragile recovery. But if it moves too late, it could unleash inflation or new speculative asset bubbles.
Bernanke, who's seeking a second term as Fed chief, has made clear his No 1 task is sustaining the recovery. Last week, he and other Fed officials signalled they are in no rush to start raising rates.
At the same time, Bernanke has sought to assure sceptical lawmakers and investors that when the time is right, he's prepared to sop up all the stimulative money.
Some encouraging signs for the economy have emerged lately. The nation's unemployment rate dipped to 10 per cent in November, from 10.2 per cent in October. And layoffs have slowed. Employers cut just 11,000 jobs last month, the best showing since the recession started two years ago.
Still, the Fed predicts unemployment will remain high because companies won't ramp up hiring until they feel confident the recovery will last.
