The only agency of the federal government that has been capable of taking action on the economy meets Wednesday. While the Federal Reserve deserves its critics, it remains the sole government department that has shown consistent willingness to respond to the challenging economy.
By now, many had figured the central bank would be reducing the amount it was spending every month buying certain bonds helping lower long-term interest rates. The strategy was undertaken 11 months ago with the hope of sparking consumer and corporate spending by lowering the cost to borrow money. It’s been mostly successful in keeping down interest rates, but gauging the success in the overall economy is more difficult. Proponents argue about “what could have been” if the Fed had not stepped up its efforts while House Republicans and President Barack Obama squared off over spending, healthcare and the debt ceiling.
It has been four months since Chairman Ben Bernanke put investors and borrowers on notice his group was preparing to scale back the bond buying in the months ahead. It hasn’t happened, and few expect it to start Wednesday.
Above all, the group wants to see the job market improve. September was another frustrating month, and October will be colored by the government shutdown. The New Year brings another congressional showdown over the budget and debt ceiling. With little room to maneuver and little room for error, the Fed should expect little help other than from itself.
Tom Hudson is a financial journalist. He hosts The Sunshine Economy on WLRN-FM in Miami. He is the former co-anchor and managing editor of on public television. Follow him on Twitter @HudsonsView.