U.S. central bank leaders are expected to hold the key interest rate steady this week, but they may begin trimming a huge bond-buying program that was intended to boost economic growth.
Federal Reserve Chair Janet Yellen is scheduled to speak with reporters about those decisions Wednesday afternoon, following a two-day strategy meeting in the U.S. capital. Surveys of economists show they do not expect the Fed to raise interest rates at this time.
During the 2008 financial crisis, Washington slashed the key interest rate nearly to zero in a bid to boost growth and jobs. Over the years, it has worked well enough to help cut the unemployment rate to its current low of 4.4 percent. As the jobless rate improved, interest rates have been raised, but remain below historic averages.
An additional effort to boost growth involved purchasing trillions of dollars’ worth of bonds. The Fed is expected to gradually reduce this program over the next few years.
Some experts worry that cutting back stimulus efforts too sharply or too soon could cause the economy to stumble back into recession. But continuing ultra-low interest rates or bond-purchase programs for too long could spark a sudden and sharp increase in prices. That inflation could also damage the economy.
