What to expect from the Fed

...Mr. Bernanke did not announce any new steps in his speech, delivered here before an annual monetary policy conference organized by the Federal Reserve Bank of Kansas City. Nor did he indicate which steps were most likely, a reticence that reflects his desire not to give details ahead of the Federal Open Market Committee, which convenes in two weeks.

Some analysts expect the Fed to announce a new round of asset purchases after that meeting, further expanding its holdings of Treasury securities and mortgage-backed securities to reduce borrowing costs and spur investment. Others expect that it will instead announce its intent to keep its benchmark interest rate near zero beyond its current forecast of late 2014. ...

...Mr. Bernanke devoted much of his speech to asset purchases. He said past rounds of purchases had produced “economically meaningful” benefits, contributing to lower borrowing costs for corporations and a general rise in stock prices. ... In addition to asset purchases and forward guidance, the account of the most recent meeting mentioned two other options. The Fed could lower the interest rate it pays banks on reserves kept at the Fed, which might push some money into circulation. It could also seek to provide low-cost financing for certain kinds of lending, like mortgage loans, emulating a program recently begun by the Bank of England....NYT