WASHINGTON — The Federal Reserve’s debate over U.S. monetary policy could begin to shift away from the prospect of reducing stimulus toward a discussion about doing more, given the signs of economic weakness and slowing inflation.
But officials are not there yet, and that wariness has been sensed by financial markets, where the dollar has retreated in recent days and bond yields have declined in anticipation that the U.S. central bank will keep the policy pedal to the metal.
At a two-day meeting that wraps up on Wednesday, the Fed is widely expected to maintain its monthly purchases of US$85-billion in bonds to support an economic recovery that is nearly four years old but still too weak for the job market to truly heal.
With the central bank’s favoured inflation gauge slipping and employment growth faltering, policymakers could again find themselves in the uncomfortable position of having to shift from…
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