When the Federal Reserve meets this week, it's likely to affirm a message it intends to help lift the economy: that consumers and businesses will be able to borrow cheaply well into the future -- even after unemployment has dropped sharply.
Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" -- and the possibility of higher taxes in 2013 -- may act as the greatest incentive to sell both winners and losers by Dec. 31.
Financial markets are likely to continue to expect another round of Fed easing for the time being, even if Fed Chairman Ben Bernanke just holds out hope for more without committing to it.
The recent stream of modestly positive economic news means the Fed probably won't take any further action to stimulate the economy at its upcoming meeting. But nobody is calling the economy healthy yet.
As Ben Bernanke prepares for the Fed's annual summer retreat, he faces a weakening economy -- and a growing chorus calling for action to boost asset prices. One thing is for sure: The world's most powerful central banker has no easy options.
When the Federal Reserve ends a two-day meeting today, most economists will be looking for hints about when interest rates may start to move higher. But the Fed may have a more serious problem: what to do about deflation when rates can't go any lower.
Anyone hoping the Fed chairman would tip his hand on when the central bank might start tightening again was disappointed. But he did have news, and that came in talking about the methods the Fed will likely use, including hiking rates paid to banks on reserves they keep at the Fed.
There's talk the Fed may shift its benchmark interest rate to the rate paid on bank reserves from the overnight rate it charges banks. The change could mean higher interest rates for many loans, and especially most credit cards for which rates vary as the prime rate goes up and down.
Federal Reserve officials who gathered last month agreed the economy appears solidly on its way to recovery and gaining momentum, minutes from the meeting reveal. But records show some members disagreed over the need for continuing and future stimulus.
The Fed now says the economy has "continued to pick up" and that "deterioration in the labor market is abating."
