Fed Chairman Ben Bernanke is likely to do little more than keep the door open to more easing when the Fed winds up its meeting Wednesday afternoon.
But the Fed should sound dovish, and economists also say there’s a good chance the Fed will announce that it is extending the time frame for its extraordinary low rate policy into mid-2015 from 2014. The Fed may also consider other actions , such as cutting the rate on reserves, but it is unlikely to do those things or another round of quantitative easing until September, at the earliest.
Yet, some traders say there are some market expectations for more action from the Fed Wednesday, and the stock market has been supported by that idea, and more recently, by the promise stimulus will come from the European Central Bank when it meets Thursday.
“I think the only thing they do is push out the calendar on the rate cut,” said Ward McCarthy, chief financial economist at Jefferies. “They just made a policy change six weeks ago. There are no press conferences. There are no revisions to economic forecasts, and they have the Jackson Hole symposium at the end of August, and I think that’s when they do the brainstorming and see what they come up with.”
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