Fed to debate possible action

September 21, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Federal Reserve policymakers are poised to have a lively debate today about what steps — if any — are needed to get the economy moving. But few expect any major initiatives to come out of the meeting.

There are differing views at the Fed’s main policymaking group — the Federal Open Markets Committee — about what should be done. And some pressure is off after a few mildly positive economic reports showed the pace of layoffs has slowed, shoppers’ appetites to spend has picked up and factory production is growing.

The reports have helped to ease concerns about the economy’s slipping back into a new recession, giving Fed Chairman Ben Bernanke and his colleagues a little breathing room.

“There are some signs of improvement, so I think the Fed is in a wait-and-see mode,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.

Even without action, the group could send a stronger signal that it is prepared to act if it looked like the economy was in danger of heading into another recession. Doing so would be aimed at boosting public and investor confidence that the Fed will come to the rescue to keep the economic recovery alive. That would reinforce a message Bernanke delivered in late August: The Fed still has some tools to help the economy and will use them if needed.