Federal Reserve to stick to same formula

May 1, 2013 9:21:48 AM



WASHINGTON -- The Federal Reserve is widely expected Wednesday to stick with its aggressive efforts to strengthen a still-subpar economy. 


The Fed will likely end a two-day meeting with a statement noting that job growth remains modest and that it's standing by its campaign to keep loan rates at record lows to help ease unemployment. 


The central bank's efforts include buying $85 billion a month in Treasurys and mortgage bonds to try to keep long-term borrowing costs down. 


Investors will have only the Fed's brief statement to study for clues to its thinking. This isn't one of the four policy meetings each year that are capped by a news conference by Chairman Ben Bernanke. 


Besides buying bonds to keep long-term rates down, the Fed has said it plans to keep its key short-term rate near zero at least until the unemployment rate dips below 6.5 percent from its current 7.6 percent. The goal is for consumers and businesses to borrow and spend more to energize the economy. 


Many economists had suggested that the Fed might scale back its bond purchases in the second half of 2013 if job growth accelerated. But the jobs report for March was surprisingly weak. And inflation has been running below the Fed's target rate, allowing it to keep stimulating the economy without igniting price increases. 


The minutes of the Fed's last meeting in March indicated that some policymakers favored slowing and eventually ending its bond buying -- as long as the economy and the job market kept improving.