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Fed To Weigh Options For Economy

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The Associated Press

Published: March 16, 2009

WASHINGTON - As they prepare to open a two-day meeting Tuesday, Federal Reserve policymakers are weighing whether to launch new programs or expand existing ones to spur lending, get Americans spending again and lift the country out of recession.

Any decisions would come Wednesday.

To try to revive the economy, Fed Chairman Ben Bernanke and his colleagues already have slashed a key lending rate to banks to a record low. Economists predict the Fed will leave that rate near zero at this week's meeting and probably through the rest of the year.

Even as the Fed pledges to use all tools to battle the crisis, it's mindful of the risks of pumping more money into the economy, bailing out financial institutions and leaving a key rate near zero for too long. Those steps could ignite inflation, put more of taxpayers' money in danger and encourage companies to make high-stake gambles, confident the government stands ready to rescue them.

Against that backdrop, some economists say the Fed won't announce any new policy actions Wednesday but instead will hold them in reserve should the economy or financial markets take a turn for the worse.

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