Taking fresh stock of economic and financial conditions, Federal Reserve policymakers are considering whether they need to take additional measures to ease the recession.
Most economists are betting there won't be any major announcements Wednesday at the end of a two-day meeting given the Fed's bold $1.2 trillion move just last month to revive the economy.
Still, analysts aren't ruling anything out as credit and financial stresses persist and a new potential danger has arisen to the economy in the form of the swine flu outbreak.
"Never say never with these guys. But I don't think they have a real reason to increase support at this time," said Michael Feroli, economist at JPMorgan Economics.
Fed Chairman Ben Bernanke and his colleagues are all but certain to leave the targeted range for its key bank lending rate between zero and 0.25%.
Economists predict the Fed will hold its key rate at that record-low level well into next year, although some would like to see the Fed provide a more explicit commitment on that front. The Fed has been pledging to hold the rate at super-low levels for "an extended period."
With the Fed's key rate near rock bottom, policymakers will examine the effectiveness of existing programs to help the economy. They also will weigh whether those initiatives need to be changed or expanded, while keeping options open for new relief measures.
The Fed hopes its various efforts will get banks to lend again, lower interest rates and increase Americans' appetites to spend, which would help lift the country out of a recession that began in December 2007.
Some analysts said it's possible — but not likely — the Fed would decide to boost its purchases of government debt beyond the $300 billion announced last month. Others said the Fed might make changes to a consumer lending program that's gotten off to a rocky start in order to make it attractive to investors.
Much hope is riding on the program called the Term Asset-Backed Securities Loan Facility, or TALF. It's been hobbled by rule changes, investor worries about financial privacy and fears that participants might become ensnared in an anti-bailout backlash from the public and Congress. Just $1.7 billion in loans was requested for the second round of funding in April — down from $4.7 billion in March.
Investors use the money to buy newly issued securities backed by auto and student loans, credit cards and other debt. The program will be expanded to include commercial real-estate loans.
On the economic front, the Fed is expected to strike a somewhat less dour note than it did at its mid-March meeting. Policymakers are likely to note some tentative signs that the recession is easing.
Some more hopeful signals emerged Tuesday. The Conference Board's Consumer Confidence Index rose far more than expected in April, jumping over 12 points to 39.2, the highest level since November. And a housing index showed that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record.
The U.S. economy has sunk sharply, although analysts are hopeful the rate of decline is lessening.
In the final three months of 2008, the economy contracted at a 6.3% rate — the worst showing in a quarter-century. Economists predict it probably declined at a 5% rate in the first three months of this year. The government will release its initial estimate for first-quarter economic activity Wednesday morning.