Federal Reserve to Announce Reduction in Stimulus Program?
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Mark Wilson/Getty Images(WASHINGTON) — The Federal Reserve on Wednesday is expected to make its first move toward slowing the economic stimulus that’s been flowing since the financial crisis started five years ago.
Following the Great Recession, the Fed implemented a bond-buying program to help give a lift to the economy. The move kept interest rates as low as possible.
“The Federal Reserve came out and started buying mortgage-backed securities so as to give some sort of help in the housing market,” Joe Deaux, an economics analyst for TheStreet.com, explains.
But that may all change on Wednesday, when economists predict the Fed will announce a new money policy.
“I think you’re going to finally see some sort of drawdown — how much, it’s difficult to say,” Deaux says.
He adds, “There are a number of people, including [Federal Reserve] Chairman Ben Bernanke, who’ve said, you know, at some point we do need to draw down these purchases, and — and I think even the more dovish people will tell you that eventually yes, the Fed does have to do that.”
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