FED Interest Rate Decision

FED INTEREST RATE DECISION - Federal Reserve officials may signal that the U.S. economy has started to recover while maintaining their pledge to keep the benchmark interest rate near a record low for an “extended period.”

Policy makers meet as analysts project 2.9 percent growth in the quarter ending this month, compared with a 1 percent estimate in July. Officials will probably debate their purchases of $1.45 trillion in housing debt, including whether to extend the emergency program into 2010, analysts said. Chairman Ben S. Bernanke and his colleagues may seek to contain any investor expectations that they will begin raising interest rates as soon as this year by citing risks to the economic recovery. Today’s Fed statement may retain references from last month to rising unemployment and “tight” credit as constraints on consumer spending.

“The Fed has to strike a delicate balance by saying that while economic prospects have brightened, the Fed will continue to provide a helping hand to ensure a bottom to markets and a durable recovery,” said Wan-Chong Kung, who helps oversee $85 billion in investments at U.S. Bancorp’s FAF Advisors in Minneapolis.

The Federal Open Market Committee, which resumed discussions this morning, is scheduled to issue its statement at around 2:15 p.m. after the end of its two-day meeting in Washington.