Bernanke to Extend Stimulus?

Posted by Wealth Wire - Wednesday, June 22nd, 2011

By Brianna Panzica

Economic growth in the U.S. has been slow.

And it’s up to the government to decide what to do about it.

Economists are now speculating that Federal Reserve Chairman Ben S. Bernanke will postpone reducing record levels of stimulus, and the long-awaited "exit strategy" is starting to look like it will be a long ways off.

The Federal Open Market Committee (FOMC) started a two-day meeting on Tuesday, which is expected to end around noon on Wednesday, to discuss policy and the stimulus plan.

The second round of the quantitative easing program, QE2, consists of the government buying $600 billion in Treasury bonds, and it is scheduled to end on June 30.

It is expected that this will end as planned.

And 69% of economists have said that a third round is “very unlikely”, according to Bloomberg.

However of 58 economists, 79% believed that the record stimulus would be prolonged until October at the earliest, a difference of 27% from after the last FOMC meeting in April, according to Bloomberg.

And 90% believe the low interest rate plan will hold out until the fourth quarter.

Economic growth has slowed lately, and right now, according to Richmond Fed President Jeffrey Lacker, it is “frustratingly slow".

In the fourth quarter of 2010, growth rate was at 3.1%, but in the first quarter of 2011 it has dropped to 1.8%.

Holding off on exiting the stimulus will help to boost the economy, and it may especially aid the unemployment rates and housing market.

The FOMC will publicly announce the results of their meeting once it lets out later today.


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