Questions abound as Fed meets
The Federal Reserve is expected to leave interest rates at a record low this week. The big question is whether Chairman Ben Bernanke and his colleagues will hint about when they will reverse course and start boosting rates.
Plans for reeling in the unprecedented amount of money the Fed has plowed into the economy to bolster the recovery are likely to dominate discussions during the two-day meeting, which started on Tuesday afternoon. The Fed is expected to announce its policy decisions later today.
The central bank faces a high-stakes challenge: If it removes the stimulus too soon, it could short-circuit the fragile recovery. But if it moves too late, it could unleash inflation or new speculative asset bubbles.
A new report out Tuesday showed that wholesale prices shot up last month, but most economists think it will prove fleeting payday loan lenders.
Wholesale prices jumped 1.8 percent in November, lifted partly by more expensive energy products, the Labor Department said. That was up from a 0.3 percent gain in October and marked the largest one-month increase since August.
Stripping out energy and food, closely watched "core" prices rose 0.5 percent, the biggest increase in more than a year.
Meanwhile, the Fed reported that industrial production jumped 0.8 percent in November from October, the largest gain since August. Even with the stronger-than-expected showing, activity is still down 5.1 percent from a year ago, showing that the industrial sector is far from running at top speed.