Chairman Ben S. Bernanke will probably reduce the FederalReserve's monthly bond buying in the fourth quarter to $50 billionfrom $85 billion as he begins to unwind record stimulus, economistssaid in a Bloomberg survey.

Policy makers must find a way to slow the pace of purchasesenough to signal confidence the economy is strengthening withoutprompting a sudden rise in interest rates, said former Fedeconomists Michael Feroli and Joseph LaVorgna. They said thatprobably means the Fed, which concludes a policy meeting today,will follow a three-step strategy to wind down bond buying.

“There is concern the first taper would be misinterpreted as theonset of a tightening cycle” and cause interest rates to go up,said Feroli, chief U.S. economist at JPMorgan Chase & Co. inNew York. An initial reduction to $50 billion to $60 billion amonth, followed by a second cut to $30 billion and then a halt tobond buying “would be enough of a runway to know and gauge theeffects of what they're doing, but not too long a runway where it'sa painfully interminable process.”

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