Ahead of Fed Meeting,US Stimulus Package Called into Question

The United State's Federal Reserve is to meet soon as Congress debates tax cuts and fiscal stimuli. There is little sign that the FED is going to make any change to the highly disputed policy of quantitative easing at the meeting. As our reporter He Fei finds out, lots of leading economists from the United States are calling the effect of the easing policy into question.

Uri Dadush, director of the Carnegie Endowment for International Peace, says the FED meeting this time will not make changes to the policy.

Analysts predict that the meeting will focus on the impact on the US economy of a scheme to extend tax cuts implemented by the Bush administration. A report from the Wall Street Journal says tax cuts may help increase US economic growth by half a percent next year, but it will expand the budget deficit as well.

The latest data on consumer confidence and trade indicates that the country is recovering from recession, but as Jorg Decressin, assistant director of the IMF's research department says, despite the promising figures, the employment situation remains tough. The uncertainty over economic prospects requires the US Federal Reserve to keep the monetary policy stable for the time being, therefore, the quantitative easing policy is not likely to be recalled.

Federal Reserve has been criticized a lot since it unveiled the bold plan to buy $600 billion US dollars in Treasury bonds last month. Critics forecast the plan may trigger inflation and result in another round of asset bubble.

Philip Suttle, chief economist from the Institute of International Finance says the Federal Reserve is facing a giant challenge now that its interest rate is at a record low near zero, the purpose of the bonds purchase is off-the-road.

It is speculated that the Federal Reserve will assess the easing plan at the year-end meeting. According to media report from the United States, Fed officials do not have high expectations for the plan. As Federal Reserve Vice Chairman Janet Yellen put it earlier, the easing plan will not be a panacea.

For CRI, I'm He Fei.