The Federal Reserve's balance sheet continues to grow. But for how long? Folks from Wall Street to Washington are hoping for a better sense this week of when the central bank's latest unemployment-fighting program, an open-ended round of bond-buying known as QE3, will come to an end.
For some congressional Republicans, the end of the stimulus program would be a relief. They fear the Federal Reserve Board may be sowing the seeds of inflation or inflating the next asset bubble, pushing on a string--a risky string--when in reality it can do no more to help the economy. Some Democrats, on the other hand, worry the Fed will back off its easy-money stance before the labor market is healed.
questions arose over whether the central bank would keep buying bonds when the minutes from the FOMC meeting in late January were made public last week. “A number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred,” the minutes said.