DETROIT (WWJ) – Policy-makers with the Federal Reserve wrap up an important two-day meeting Wednesday, addressing economic growth, inflation and interest rates.
WWJ and FOX 2 Business Editor Murray Feldman said the Reserve’s decision on whether to continue its multi-billion dollar asset purchase program will be key.
“The Federal Reserve has been buying federal government bonds, $600 billion worth, and it’s believed that’s what’s been prompting up the financial markets,” Feldman said.
“But, the second round of bond purchasing is set to expire soon. So, the question is, will there be a QE3 and if not will the markets fall, that’s more uneasiness that plagues the minds on Wall Street.”
The markets will be listening closely to Wednesday’s announcement and they do not want to hear the words “double-dip recession.”
“They’re asking the Federal Reserve board and the Chairman Ben Bernanke to please tell them there isn’t going to be a double dip… tell them that things are going to be ok, but when you do, convince them that they should believe that,” Feldman said.
“It’s like if you go to the doctor and you find out you’re sick, that’s bad. But, if the doctor can tell you that he or she knows how to make you better, and then tells you how that plan’s going to work, it’s not such a crisis. That’s what’s going on in the financial world today.”
Most economists anticipate the Reserve will stay the course on interest rates.
The Federal Open Market Committee plans to publish a policy statement around 12:30 pm, followed by the bank’s updated estimates on economic growth, unemployment and inflation.