Fed will likely stress commitment to low rates amid pandemic

WASHINGTON (AP) — The Federal Reserve this week will likely underscore its commitment to its low-interest rate policies, even as the economy recovers further from the devastation of the viral pandemic.

Chair Jerome Powell is sure to strike a dovish tone at a news conference after the Fed's latest policy meeting ends Wednesday. He may, in particular, aim to puncture any speculation that the Fed might soon curtail its aggressive efforts to support the economy, including its bond purchase program that aims to hold down long-term interest rates.

The conditions the Fed has laid down before it would adopt any policy changes aren't close to being met, so no new actions are expected this week. Still, analysts will scrutinize the Fed's policy statement and Powell's comments to reporters to gauge how Fed officials are reacting to recent economic developments.

Since the Fed last met, in mid-December, there has been some good news. The distribution of an effective vaccine has begun and a $900 billion relief package was enacted in late December. President Joe Biden has since proposed another financial support plan — a $1.9 trillion package that is larger than many economists had expected and will require congressional approval.

In recent months, Powell had repeatedly urged Congress and the White House to provide such stimulus. But he will likely try to avoid sounding overly optimistic about the economy’s prospects for fear of encouraging speculation that the Fed will slow or withdraw its support earlier than expected.

“The emphasis will be on, ‘We’re not out of the woods yet,’ ” said Seth Carpenter, an economist at UBS and a former Fed economist.

Some central bank officials have suggested that they might consider withdrawing Fed stimulus later this year, earlier than investors generally expect, but Powell...