Economists say Fed likely to take wait-and-see approach on stimulus

Oct. 25, 2013 at 2:59 PM   |   Comments

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WASHINGTON, Oct. 25 (UPI) -- The U.S. Federal Reserve likely will adopt a wait-and-see stance that the economy is strong enough to handle a change in stimulus policy, economists said.

The consensus among Fed watchers is that it will maintain the $85-billion-a-month asset-buying program after it closes its two-day meeting next week, MarketWatch.com reported Friday.

"They are going to be tapering likely before too long; they are just not ready to do it yet," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

"They will not want to send a message one way or the other. December is still in play. We'll have to see how the numbers play out," O'Sullivan said.

In recent days, many Fed watchers shifted expectations of the first reduction in the asset buying program to March 2014, given the puny September job numbers released Tuesday.

Economists said they see data remaining weak and muddled from the impact of the partial federal government shutdown and political standoff over raising the nation's debt limit, MarketWatch.com said.

O'Sullivan said there is still a chance for a December move, particularly if economic data remains strong despite the two-week shutdown.

Thomas Simons, vice president and money-market economist at Jefferies, told MarketWatch.com he was less certain about a change in December.

"If the data improved dramatically, a move is possible in December, but at this point the chances of that look remote," he said.

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