April 29 (Reuters) - The Federal Reserve is expected to maintain support for the U.S. economic recovery with its $85-billion-per-month bond-buying program when it wraps up a two-day meeting on Wednesday.
Minutes from last month's policy meeting showed many Fed officials thought stronger growth could allow the U.S. central bank to cut back on asset purchases in coming months. ID:L2N0CX0RV]
But a report showing U.S. employers added just 88,000 jobs in March, along with other signs of a springtime slowdown in the economy, has pushed back expectations of imminent tapering.
The policy-setting Federal Open Market Committee is expected to announce its decision at 2:15 p.m. (1815 GMT) on Wednesday.
Here is an overview of what steps the Fed is weighing:
The Fed is widely expected to keep to its current pace of asset purchases - $45 billion of Treasuries each month, and $40 billion of mortgage-backed securities - in what is its third round of quantitative easing, dubbed QE3.
Just one of the policy-setting panel's 12 voting members last month wanted the Fed to slow purchases immediately, and weaker economic data since then makes it unlikely that view will have won new converts.
Fed officials will likely weigh whether the slower growth, which many blame on uncertainty over government spending cuts, marks a temporary or more longer-lasting setback.
At the same time, Fed officials are paying attention to a decline in inflation that, if it continues, could warrant an increase in asset purchases.
So far, they don't expect that to happen: although a report on U.S. GDP on Friday showed consumer prices rose at only a 0.9 percent annual rate in the first quarter. So-called core prices, which strip out food and energy costs, advanced at just a 1.2 percent pace. The Fed targets 2 percent inflation.
Last month, all but a few of the Fed's 19 policymakers thought it should continue buying at its current pace through at least midyear. Only two said they expected some purchases to extend into 2014. Any shift in those views may not be clear until the Fed releases minutes of this week's meeting on May 22.
But what is clear is that there is broad consensus that any end to the program should come gradually rather than abruptly, and Fed officials may discuss exactly how that paring could take place. Two hawkish policymakers have expressed a preference for the Fed to cut back on mortgage-backed securities purchases first, while at least one dovish policymaker believes Treasury purchases should be the first to go.
The Fed last laid out a blueprint in June 2011 for its eventual exit from super-easy monetary policy. Since then the Fed's balance sheet has grown to more than $3.2 trillion, and Fed Chairman Ben Bernanke said in February the central bank may conduct a review of its exit strategy 'some time soon.'
Most analysts expect any revisions to be released when the chairman has a post-meeting news conference on tap, meaning June at the earliest.
But Fed policymakers are already discussing tweaks to the plan, including the possibility of holding mortgage-backed securities to maturity instead of selling them as originally planned.
The Fed's communications subcommittee has been asked to explore ways to provide more information on policymakers' views of appropriate balance sheet policy and the outlook for asset purchases.
The 19 policymakers - seven members of the Washington-based Board, and the presidents of each of the 12 regional Fed banks - currently provide individual forecasts for inflation, unemployment and GDP growth under their individual assessment of appropriate monetary policy.
But there is no similar level of detail on their views about how big the Fed's massive balance sheet could get, or at what speed it could shrink, both of which impact how much downward pressure the portfolio puts on borrowing costs.
(Reporting by Ann Saphir; Editing by James Dalgleish) Keywords: USA FED/
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