U.S. News: Economists Are Uncertain More Fed Moves Will Work
Economists are skeptical about the economic benefits of another round of bond buying by the Federal Reserve, though most expect the central bank to embark on that course when its latest policy meeting concludes Thursday, according to The Wall Street Journal's latest forecasting survey.</br></br>Thirty-four of 47 respondents to the survey said they expected the Fed to announce another round of large-scale asset purchases, known as quantitative easing, or QE, at the meeting. Another seven expect a move later this year, while five said they don't believe the bank will take action in 2012.</br></br>The Fed has sent multiple signals in recent months strongly suggesting it is moving toward a new program in an attempt to bolster economic growth. Most recently, Chairman Ben Bernanke said at a Fed conference in Jackson Hole, Wyo., that the weak job market was a grave problem and that more bond buying could help lower unemployment.</br></br>Fed officials believe the programs -- which in the past have involved the purchases of assets including Treasurys or mortgage-backed securities -- push down long-term interest rates, push up stock prices and soften the dollar, which in turn they believe helps to stimulate spending, investment and exports.</br></br>While the economists believe the Fed will act, they raised doubts about Mr. Bernanke's arguments. Of those who answered the survey of 51 forecasters, 28 said more QE this year would be a mistake, while 17 said it would be the right thing to do. Those surveyed are a mix of Wall Street, business-sector and academic economists. Not all economists answered every question.