US Fed opens meeting amid easing speculation

But divining the direction of policy will also be challenged by the arrival of four new voting members to the 12-strong Federal Open Market Committee (FOMC) policy panel under an annual rotation of regional Fed presidents.

Analysts expected the FOMC, led by Chairman Ben Bernanke, would announce no change in policy tack at the conclusion of the two-day meeting Wednesday.

At the Dec. 11-12 meeting, the central bank boosted its asset purchases to US$85 billion a month, on an open-ended basis.

It also set for the first time unemployment and inflation targets for curbing stimulus and signaled that it expected to hold its benchmark interest rate at the current ultra-low level through mid-2015.

But minutes of the FOMC meeting exposed divisions among policymakers over how long to keep policy accommodative, with some suggesting a tightening may be warranted as early as this year.

“Expectations for the Fed have shifted significantly in the past couple of weeks, which in turn has moved the bond market,” said Chris Low at FTN Financial.

“The market now expects the Fed will raise rates in Q4, 2014.”

The FOMC meeting comes sandwiched in a week packed with economic data. Early Wednesday payrolls firm ADP will report on January job growth and the government will provide its first estimate of 2012 fourth-quarter economic growth.

On Friday, the highly anticipated January jobs report is expected to show the unemployment rate slipped a tenth point to 7.7 percent, well above the Fed's benchmark 6.5-percent jobless rate to tighten policy.

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