Fed Is Expected To Maintain Stimulative Programs
Though the economy has brightened this year, it still faces threats, including across-the-board government spending cuts that took effect March 1 and are expected to trigger furloughs and layoffs. Those spending cuts, along with the Social Security tax increase and higher taxes on top earners, are expected to cut growth in half this year, according to the Congressional Budget Office. The CBO predicts that the drag will slow growth by 1.5 percentage points, to 1.5 percent.
David Jones, chief economist at DMJ Advisors, expects the Fed's policies to remain intact this week and at its April meeting. But he says policymakers might signal at their June meeting that they're considering some changes in their bond-buying program.
"I think the June meeting will be the one that really counts," Jones says. "At that time the Fed might consider at least tapering its $85 billion in bond purchases to a smaller level."
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