Thursday, October 19th, 2017

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Fed Likely to Introduce New Policy, But Expectations Muted

Fed Chairman Ben Bernanke is expected to announce new monetary easing policies.The Federal Reserve is likely to announce a new monetary easing policy, according to a Bloomberg survey.

Reuters reports that the Federal Reserve began its meeting of the Federal Open Market Committee on Tuesday, September 20. The policy-making body was responsible for the recent "quantitative easing" policies designed to spur economic activity that ended in June.

Bloomberg reports that the majority of economists surveyed – 71 percent – expect the Fed to begin a new policy measure known as Operation Twist, in which it will shift the short-term bonds in its portfolio into longer-term bonds.

A smaller majority – 61 percent – expect this approach to fail, leaving the unemployment rate stagnant above 9 percent.

"It's better than nothing but it's obviously not going to be a knockout blow or a game changer for the economy," Michael Feroli, chief U.S. economist for JPMorgan Chase, told Bloomberg.

However, dissent has grown recently within the Fed, with Chairman Ben Bernanke facing a difficult task in convincing the three members of the FOMC who voted against maintaing the current low interest rates.

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