WASHINGTON — Federal Reserve policymakers are weighing whether additional steps are needed to brace the economy as an outbreak of the swine flu has emerged as a potential new danger that could aggravate the recession.
Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon to take fresh stock of already fragile economic and financial conditions.
The swine flu outbreak, which started in Mexico and has spread to the United States and elsewhere, could force American consumers to retrench further. That would deal a blow to the domestic economy, which has flashed some signs the recession could be letting up a bit.
Some good signs
Other hopeful signals emerged Tuesday. The Conference Board’s Consumer Confidence Index rose more than expected in April, jumping 12 points to 39.2, the highest level since November. And a housing index showed home prices dropped sharply in February, but for the first time in 25 months the decline was not a record. To ease the impact of the recession, economists predict the Fed will keep its targeted range for its bank lending rate between zero and 0.25 percent at this week’s meeting and probably well into next year.
With its key rate already at a record low, the Fed will examine the effectiveness of programs already in place to combat the worst financial crisis since the 1930s. Fed policymakers will consider whether programs designed to ease the credit crunch need to be expanded or changed, and whether new relief efforts need to be implemented. Any decisions would come at the conclusion of the Federal Reserve’s meeting this afternoon.
"This is a good meeting for Fed policymakers to pause and take stock of what they’ve done so far and allow programs to do their thing,” said Michael Feroli, economist at JPMorgan Economics.
Feroli and others aren’t expecting the kind of aggressive action the Fed took at its last meeting in mid-March. That was when the Federal Reserve decided to plow $1.2 trillion into the nation’s economy to try to lower interest rates and stimulate borrowing and spending.
Before the swine flu outbreak, many analysts were predicting the recession would ease further, with the economy shrinking at a rate of 2 to 2.5 percent in the current quarter.
However, analysts warn that any severe outbreak of the swine flu would not only clobber tourism, food and transportation industries, but crimp spending on other things if consumers get spooked.
For now, analysts are hopeful that any economic fallout will be limited and short-lived.
by the associated press
Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon to take fresh stock of already fragile economic and financial conditions.
The swine flu outbreak, which started in Mexico and has spread to the United States and elsewhere, could force American consumers to retrench further. That would deal a blow to the domestic economy, which has flashed some signs the recession could be letting up a bit.
Some good signs
Other hopeful signals emerged Tuesday. The Conference Board’s Consumer Confidence Index rose more than expected in April, jumping 12 points to 39.2, the highest level since November. And a housing index showed home prices dropped sharply in February, but for the first time in 25 months the decline was not a record. To ease the impact of the recession, economists predict the Fed will keep its targeted range for its bank lending rate between zero and 0.25 percent at this week’s meeting and probably well into next year.
With its key rate already at a record low, the Fed will examine the effectiveness of programs already in place to combat the worst financial crisis since the 1930s. Fed policymakers will consider whether programs designed to ease the credit crunch need to be expanded or changed, and whether new relief efforts need to be implemented. Any decisions would come at the conclusion of the Federal Reserve’s meeting this afternoon.
"This is a good meeting for Fed policymakers to pause and take stock of what they’ve done so far and allow programs to do their thing,” said Michael Feroli, economist at JPMorgan Economics.
Feroli and others aren’t expecting the kind of aggressive action the Fed took at its last meeting in mid-March. That was when the Federal Reserve decided to plow $1.2 trillion into the nation’s economy to try to lower interest rates and stimulate borrowing and spending.
Before the swine flu outbreak, many analysts were predicting the recession would ease further, with the economy shrinking at a rate of 2 to 2.5 percent in the current quarter.
However, analysts warn that any severe outbreak of the swine flu would not only clobber tourism, food and transportation industries, but crimp spending on other things if consumers get spooked.
For now, analysts are hopeful that any economic fallout will be limited and short-lived.
by the associated press
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