Federal Reserve officials are taking a steady-as-she-goes stance as they prepare for their policy meeting this month, even though market volatility and uncertainties about the global economic outlook have rattled investors in recent weeks and led to some mixed messages from central bank officials.
The Fed is highly likely to end its bond-buying program on schedule at the Oct. 28-29 meeting, according to recent interviews with officials and their public statements. Officials also are preparing to debate whether to fine-tune the Fed’s formal assessment of the labor market and the guidance it provides about the likely path of interest rates.
“I haven’t really changed my view on the economic outlook,” San Francisco Fed President John Williams said in an interview Friday.
He sees the economy growing at a 3% annual rate in the second half of the year and into 2015, the jobless rate continuing to fall and inflation gradually rising to the Fed’s 2% goal. “My baseline forecast implies ending the asset-purchase program on schedule.”
The Fed has been buying mortgage and long-term Treasury bonds since 2012 in an effort to hold down long-term interest rates and stimulate the economy. The Fed said after its September meeting it intended to end the program this month. St. Louis Fed President James Bullard said last week the Fed should consider extending the program because U.S. inflation expectations appear to be drifting down, a possible sign of continuing economic headwinds. But other officials haven’t embraced the idea of continuing the bond purchases.