WASHINGTON — A lot can change in six weeks.
When the Federal Reserve last met in mid-September, almost everyone expected it to start reducing the stimulus it’s given the U.S. economy to help it rebound from the Great Recession.
It didn’t. The Fed pulled a surprise by deciding not to slow its $85 billion-a-month in Treasury and mortgage bond purchases. Its bond buying has been intended to keep long-term loan rates low to support the economy.
And now? After a 16-day partial government shutdown and a batch of tepid economic data, no one thinks the Fed will reduce its stimulus when it meets today and Wednesday. Many analysts now predict the Fed will maintain the pace of its bond purchases into next year.
Blame the uncertainty surrounding Congress’ budget fight and renewed questions about the economy’s health.
“I think March is now the earliest that any reduction in bond purchases will happen,” said Diane Swonk, chief economist at Mesirow Financial.
If the Fed does start slowing its stimulus in March, it will have left its policy unchanged not just this week but also at its next meeting in December and at its subsequent meeting in late January. The delay would signal a dimmer economic outlook.