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Survey: Experts expect Fed to act

Policymaker finishing 2-day meeting today

WASHINGTON – Most market participants expect the Federal Reserve to announce another round of stimulus today, but nearly 6 in 10 doubt it will lower unemployment.

Those were the findings of a CNBC survey of 58 money managers, strategists and economists. The poll, released Wednesday, also found financial professionals prefer Republican Mitt Romney over President Barack Obama in November’s election 53 percent to 18 percent.

But if they had to bet, they’d put their money on the incumbent. Asked whom they expect to win, 46 percent of respondents said Obama and 24 percent said Romney, with the rest unsure.

Wall Street and Washington are watching closely as the Fed’s policymaking body, the Federal Open Market Committee, finishes a two-day meeting today.

With last week’s disappointing jobs report adding to worries about the economic recovery, 9 in 10 market participants in the CNBC survey said they expected the Fed to launch another stimulative bond-buying program in the next 12 months. That’s up from 78 percent at the end of July and 58 percent in early June.

Of those thinking the Fed will act, 77 percent expect it to do so this week. As CNBC noted, such a high level of expectation means the Fed risks a market sell-off, if it does not act.

The average size of the program predicted was $510 billion, which would be just short of the $600 billion round of so-called quantitative easing that the Fed ran from November through June.

Most respondents – 86 percent – believed the Fed would buy a mix of Treasury bonds and mortgage-backed securities.

Analysts have said Fed purchases of mortgage bonds would lower interest rates and provide more of an economic boost than buying Treasuries.


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