The Federal Reserve is scheduled to hold its next policy meeting this month.
Here’s a look at what that could mean for the economy and the central bank.1.
Fed chair Janet Yellen could remain in her post for yearsThe central bank’s chair Janet L. Yellen, who has not yet been confirmed by the Senate, has not ruled out another term.
She has not given any indication that she will retire after the November midterm elections.
“She has said she’s open to serving again,” said Matt Tully, a professor at the University of Michigan Law School who specializes in Fed policy.
But that could change.
“It’s possible she could stay for a long time,” he said.
She could serve as chair for an extended period of time.2.
Fed will not rule out more rate hikesEven as the central banks monetary policy committee meets next week, the Fed is expected to announce more interest rate increases in the coming weeks.
That could include a third round of rates hikes scheduled for the end of September, as well as a fourth round in December.
But the Fed could also hold off on any further rate hikes for several more months.
“We’ve already seen the effects of the Great Recession, the consequences of the economic crisis and the aftermath of the financial crisis,” Fed Vice Chairman Stanley Fischer said in a speech at Georgetown University on Tuesday.
“But the pace of interest rate hikes should be slow and steady.”
The Fed will likely keep a close eye on the economy, however, and the economy could get worse if the central bankers rate hike strategy does not work.3.
Fed is likely to announce new policy, and it could take years to implement itThe Fed is also expected to release a new report on Tuesday detailing how it is planning to respond to the financial and economic crisis.
And the Fed’s board will likely announce its next action after its next meeting.
In its latest report on Wednesday, the board is expected, among other things, to address whether to raise interest rates again.
“Our focus is on delivering on our mandate, and that’s our focus,” Fischer said.
But Fischer has previously said that the Fed has no intention of raising rates.
“The central bankers mandate is to reduce the rate of interest to 2 percent, which is where it should be,” Fischer wrote in a Wall Street Journal op-ed in April.
“I am confident that the Federal Open Market Committee will act to maintain its low interest rate policy, consistent with its statutory mandate.”4.
Fed may move to tighten monetary policy in response to economic weaknessIn a report issued Wednesday, Fed Chair Ben Bernanke said that, if the economy continues to grow at its current rate, the centralbank will begin to tighten its monetary policy to try to bring the economy back to its pre-recession pace.
“If the economy is not doing well, we may need to increase the monetary base by reducing the balance sheet, which will bring the monetary system closer to full employment,” Bernanke wrote.
“This is something that we have been discussing with the Administration and with the Congress for some time.”
In his speech Wednesday, Bernanke also said that it is possible the Fed will start to raise rates again, perhaps as soon as December.
“There is a good case to be made for the next rate hike at some point in the near future,” he wrote.
He said that if that happens, it is likely that “we will be well into the middle of our fourth round of rate hikes,” the Fed said.5.
The central bank could start to move to the more hawkish positionThe Fed has been very reluctant to raise rate hikes this year, and there is little evidence that the central, central bank has been acting on any of the Fed chair’s policy ideas.
In fact, some economists say the central board has been taking a more hawish approach.
Bernanke has said that he thinks the Fed needs to raise its rate, and he has said repeatedly that it has no interest in hiking.
“What I’ve said publicly is that the only way to keep the Federal Reserve from hiking rates is to lower rates,” Bern