Fed to review $600 billion bond-buying programme at meeting
WASHINGTON: After launching a much-criticized $600 billion bond-buying program last month to bolster the economy, the Federal Reserve is now taking stock of how it's working. Fed Chairman Ben Bernanke and his colleagues will gather Tuesday for their last scheduled meeting of 2010, and no policy changes are expected. Instead, Fed policymakers will examine the effectiveness of the unfolding program and discuss the implications of a tax-cut plan emerging from Congress. Since the Fed announced its second round of stimulus on Nov. 3, stocks have risen. That's encouraging for the economy because larger stock portfolios make people, especially the wealthy, more inclined to spend. On the other hand, rates on mortgages have risen, defying one of the Fed's stated goals of the bond-buying program. The average rate on a 30-year fixed mortgage has climbed to 4.61 percent. It's up sharply from 4.17 a month ago, the lowest rate in in some 40 years of recordkeeping.
The Fed's decision to buy $600 billion worth of government bonds by the end of June is intended to spur Americans to spend more, which would invigorate the economy.
Even supporters had cautioned that the benefits of the Fed's program would be modest. Even after the Fed unveiled it, Bernanke pressed Congress to intervene by providing the economy with stimulus. Bernanke warned that the Fed couldn't solve the economy's problems on its own. Critics, from Republicans in Congress to some officials within the Fed, have also said they fear the Fed's intervention could spur inflation and speculative buying on Wall Street while doing little to energize the economy. -Ap