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The Federal Reserve is on track to close down its bond buying program on schedule, leaving a chapter of its crisis recovery period behind even as it see difficulties in returning to normal policy.
The US central bank is expected to announce the end of the program when its ongoing two day meeting concludes. At its peak, the Fed added as much as $85 billion worth of assets into its mortgage backed securities and Treasury bond holdings in order to pump money into the market. Even with its end, however, the bank is still far from regaining a normal posture due to having a balance sheet worth over $4 trillion and interest rates still at near zero levels.
Additionally, the advent of global risks may lead to the Fed playing an extended role in propping up the US economy.
A statement from the bank later on today is being awaited by markets where analysts will be looking for clues on how lower than expected inflation, slowing growth around the world, and volatility in global financial markets is affecting policy makers.
Analyst Vincent Reinhart from Morgan Stanley says that, “They are worried about the economy, the global one,” which could indicate that they are unlikely to announce any progress towards an increase in interest rates.
The Federal Reserve is forecasting the US economy to expand by 3% this year alongside inflation levels creeping up to its target goal of 2%. Weakness in economies around the world and declining prices of oil, however, have led some to be dubious of the prediction.
