Fed seen maintaining bond-buying, but divisions remain

WASHINGTON, Wed Jan 30, 2013 — The Federal Reserve is expected to keep monetary policy on a steady path when it concludes a two-day meeting on Wednesday, though behind the scenes intensive debate continues over when it should curtail its controversial bond-buying program.

The policy statement issued by the U.S. central bank at the end of the meeting will likely be only slightly rephrased from the one in December to reflect minor changes in the economic outlook, notably reduced risks from financial turmoil in Europe.

Otherwise, economists say the policy-setting Federal Open Market Committee will maintain asset buying at $85 billion a month and retain the commitment to hold interest rates near zero percent until the unemployment rate falls to 6.5 percent, provided inflation does not threaten to breach 2.5 percent.

The Fed has taken unprecedented steps to try to spark a stronger economic recovery and drive down unemployment. It has kept overnight interest rates near zero since late 2008 and has launched three rounds of bond purchases, known as quantitative easing, to drive other borrowing costs down.