Federal Reserve Chairman Ben Bernanke may have to muffle his applause for the sturdier U.S. economic recovery.
The unemployment rate is finally edging lower and figures due on Friday are expected to show economic growth strengthened over the final three months of 2010. But the Fed may provide only a slightly more upbeat economic assessment at its next policy-setting meeting, which wraps up on Wednesday.
The central bank’s word choices are always parsed and scrutinized. This week’s statement will be particularly tricky because the Fed will need to acknowledge the improving economic data without sending a false signal that its $600 billion bond-buying program could end early.
But if Bernanke and company are too sparing in describing the recovery’s progress, that could be interpreted as a lack of faith that this latest burst of economic vigor will last.
At its last meeting, in December, the central bank said the economic recovery was continuing but at too sluggish a pace to bring down unemployment, and the high jobless rate was weighing on consumer spending.
The jobless rate, however, dipped to 9.4 percent in December from 9.8 percent the previous month, still well above normal but down considerably from a cycle peak of 10.1 percent hit in October 2009.