With the U.S. economy slowing considerably in recent months, calls have increased for the Federal Reserve to maintain and/or expand it accomodative monetary policies.
Roberto Perli, a former associate director in the Fed’s Division of Monetary Affairs, said in an interview with Bloomberg that “At a minimum, the FOMC (Federal Open Market Committee) will have a serious debate about the policy options -what they should do, and what they expect to get from it.”
Perli – who is now a director of policy research at International Strategy & Investment Group – also noted that ”Growth in the first half was dangerously close to zero.”
The Federal Reserve’s next FOMC meeting is scheduled for next Tuesday, August 9, and all eyes will be on Chairman Bernanke. Last month, “Helicopter Ben” said in congressional testimony that the Fed could implement additional measures if the economy slows further – including a third round of bond purchases (QE3).
Bernanke also stated that the Fed could lower the interest rate it pays banks on excess reserves, not reduce the size of its balance sheet, and keep the Fed Funds rate at an all-time low.