Many analysts think the Fed will keep paring its support at each of its meetings this year until it eliminates new bond purchases entirely in December. In making the announcement Wednesday of another $10 billion reduction in bond purchases, the Fed cited an improving economy, including more strength in consumer and business spending.
However, some Fed officials have expressed concerns about withdrawing economic support while prices are rising at such a sluggish rate. While high inflation can be a problem, the Fed also worries if prices are rising too slowly, a development that raises the prospect of deflation. That can also do serious harm to an economy.
For December, prices measured by an inflation gauge tied to consumer spending rose a modest 0.2 percent, compared with November, and were up just 1.1 percent for the entire year, well below the Fed's 2 percent inflation target.
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