Fed eyes new tools to ease crisis, instil confidence
Federal Reserve policymakers open a two-day meeting Tuesday in search of new tools to stimulate lending and revive an economy that has so far failed to respond to its zero-interest rate policy.
The two-day meeting of the Federal Open Market Committee is being held six weeks after the central bank slashed its base lending rate to a range of zero to 0.25 percent and predicted "exceptionally low" rates to persist "for some time."
Sacha Tihanyi, analyst at Scotia Capital, said the market expects some additional help from the Fed.
"With rates going nowhere for some time, the market's focus will be on whether the Fed will be looking to buy government (or corporate) securities in the near future. This is a highly controversial step and some see this as somewhat of a high-risk policy but on the other hand, it is one of the few avenues the Fed has left open to it with regard to further easing monetary conditions."
Despite the zero rate policy, Fed chairman Ben Bernanke and others have repeatedly said the central bank is not out of ammunition to fight the crisis.