The Fed has two days to figure it out, then tell the rest of us.
After pumping more than $1 trillion into the economy, how will the central bankers reel in that money?
The Federal Reserve’s policy-making arm begins meeting Tuesday, and it’s expected to say something about its exit strategy at 1:15 p.m. Central time Wednesday.
Investors remain skeptical. So far, the Fed has been all about buying troubled assets and keeping interest rates low to revive the economy.
In a report this week, the Global Markets economics team at Deutsche Bank says Ben Bernanke and Co. have started heading for the exits. Its balance-sheet expansion “has been running in reverse for a number of months now,” the bank’s economists wrote. Next will come an end to asset purchases, and finally interest-rate hikes — but not until credit loosens and a “sustainable recovery” gets under way.
“These conditions seem unlikely to occur until well into 2010,” the bank wrote, “contrary to market expectations.”
Yes, this is going to take a while.
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Burns blogs on business: Read the latest at chicagotribune.com/burnsonbiz