Economists expect the U.S. central bank to announce it'll stop buying bonds, marking another big milestone toward ending crisis-era measures. Fred Katayama reports.
REFEEDING WITH CORRECT BALANCE SHEET NUMBER. Federal Reserve policy makers started their two-day meeting Tuesday that could mark a big milestone. Wall Street expects the central bank to announce it'll stop buying bonds - a step toward gradually shrinking its massive $4.5 trillion balance sheet to around $3 trillion. U.S. Bank senior portfolio manager Eric Wiegand: SOUNDBITE: ERIC WIEGAND, SENIOR PORTFOLIO MANAGER, U.S. BANK, (ENGLISH) SAYING: "We would concur the Fed is in a unique position to really illustrate their desire to start balance sheet normalization. We think that it will actually be initiated in October but the Fed will also likely look to include language allowing themselves the opportunity for perhaps further rate normalization before year end." Unwinding the bond portfolio would be another step toward ending the measures the Fed took under then chairman Ben Bernanke's leadership to combat the financial crisis. The Fed had bought bonds to lower interest rates, boost spending, stimulate the economy and encourage riskier investing. But now, some critics say that may be distorting financial conditions. Bonds aside, economists expect the Fed to hold interest rates steady at this policy meeting but possibly raise them at its December meeting.