Fed ramps up economic stimulus, ready to do more

Go Away Federal Reserve System! (Photo credit: r0b0r0b)

By Mark Felsenthal. WASHINGTON (Reuters) - With economic storm clouds gathering abroad and signs the U.S. recovery is flagging, the Federal Reserve may feel compelled on Wednesday to launch a new round of monetary stimulus.

Confronted with rising financial strains in Europe, a year-end fiscal showdown in Washington and a sharp slowdown in hiring by U.S. employers, many economists expect the Fed to extend a program aimed at pushing down longer-term interest rates to shield the still-fragile economy.

"The prevailing bias at the Fed is very much tilted toward providing more accommodation," said Eric Green, global head of rates research and strategy at TD Securities in New York.

An extension of "Operation Twist," in which the central bank sells bonds with maturities of three years or less and buys securities with maturities of six years and longer, is seen as a less extreme step than outright purchases of new securities. This week is the Fed's last scheduled policy meeting before Operation Twist expires at the end of this month.... Continue to read.

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