The US Federal Reserve is expected to decide to increase its bond purchase plan during a two-day policy meeting.
The expectation is that the Fed will unveil a program to buy 45 billion US dollars a month in long-term Treasury bonds. This would replace an program called Operation Twist that expires at year end.
With Twist, the Fed sold short term treasuries to buy longer term ones. The new bond purchase plan would join the so-called QE3 announced in September.
On the other hand, if the Fed chooses not to replace Twist with a new bond-buying program, the value of its long-term Treasury purchases will decline by half. The two-day Fed meeting will end Wednesday with a statement announcing its policy decisions.
Afterward, the Fed will update its forecasts for the economy, and Chairman Ben Bernanke will hold a news conference.