When it comes to the government shutdown and possibility of a debt default, the Federal Reserve can’t save the day — but that may not stop it from trying to soften the blow to the U.S. economy.
It is becoming increasingly likely the Fed will keep its stimulus program in place longer than many expected. Since last September, the Fed has been buying $85 billion in bonds each month in an effort to lower long-term interest rates, particularly on mortgages.
Many economists once thought the Fed would start gradually reducing that program this year — a process that has come to be known as “tapering.” But now some are saying the Fed may wait another five months before it begins to wind it down.
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