STOCK MARKET WATCH -- Thursday, 13 September 2012

[Ghost Dog]

16. Fed expected to announce stimulus Thursday

WAPO - By Zachary A. Goldfarb, Updated: Thursday, September 13, 1:56 PM

The Federal Reserve is poised on Thursday to open a new offensive in the battle to reduce unemployment, with many economists predicting that the U.S. central bank will take its most significant steps in years to speed up the nation’s economic recovery.

The Fed is widely expected to deliver a range of stimulus when it announces the results of its two-day policymaking meeting at 12:30 p.m. Thursday. The central bank is all but certain to extend its plan to keep interest rates ultra-low into mid-2015. Currently it plans to do so only until late 2014.

There is also a good chance that the Fed will announce a new round of bond purchases, this time likely targeting the mortgage market. The bank could announce that it is buying a set amount of mortgage bonds over a fixed period of time — likely hundreds of billions of dollars over a number of months — or keep the program open-ended, promising to continue to stimulate the economy until it gets significantly better.

In totality, the programs would likely bring down interest rates — which are already at record lows — to support lending, borrowing and spending. But economists do not believe the measures are likely to speed economic growth much or the decline in the 8.1 percent unemployment rate.

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