The Federal Reserve is expected to leave monetary policy unchanged when it concludes its two-day meeting Wednesday but investors will be looking for clarity on tapering. The QE program is widely expected to be maintained at $80 billion of Treasuries and $40 billion of Mortgage-Backed Securities and the central bank is seen reinforcing it will not pull it back anytime soon. However, more near-term inflation pressures arising from the economic recovery and substantial fiscal stimulus could lead policymakers to tighten its policy early than initially expected.
The Fed is also seen renewing its pledge to keep borrowing costs low for as long as necessary and whatever it can to help the economy recover from the coronavirus-hit. The central bank left the target range for its federal funds rate unchanged at 0-0.25% and its QE programme on hold during its December 2020 meeting, in line with forecasts.