Fed Seen Slowing Stimulus by Year-End

Fed policymakers aren't expected to announce any change after today's meeting.

Chairman Ben S. Bernanke will probably reduce the Federal Reserve’s monthly bond buying in the fourth quarter to $50 billion from $85 billion as he begins to unwind record stimulus, economists said in a Bloomberg survey.

Policy makers must find a way to slow the pace of purchases enough to signal confidence the economy is strengthening without prompting a sudden rise in interest rates, said former Fed economists Michael Feroli and Joseph LaVorgna. They said that probably means the Fed, which concludes a policy meeting today, will follow a three-step strategy to wind down bond buying.

Quantitative Easing

The bond purchases, known as quantitative easing, have helped push up stock prices and reduce bond yields. The yield on the 10-year Treasury note yesterday was little changed at 1.67 percent in New York, near a low for 2013, as signs of weakness in the economy allayed concerns the Fed may curtail bond buying. The Standard & Poor’s 500 Index closed at a record high 1,597.57, as a rise in consumer confidence offset a drop in business activity.

Jobs Report

The Labor Department on May 3 will probably say the unemployment rate in April remained unchanged at 7.6 percent as employers added 148,000 jobs, according to the median estimate in a separate Bloomberg survey.

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