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Fed Balance Sheet to Reach $4 Trillion With Next Announcement

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Call it QE Whatever.

The Federal Reserve will “amplify record accommodation” by announcing $45 billion in monthly Treasury buying that will push its balance sheet to almost $4 trillion, according to a Bloomberg survey of economists.

The news service reports that 48 of 49 economists predict that the Federal Open Market Committee on Wednesday will purchase Treasuries to bolster an existing program to buy $40 billion in mortgage bonds each month. The panel pledged in October to continue that plan until the labor market improves “substantially.”

“It’s going to be massive and open-ended in size,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York and a former New York Fed economist, told Bloomberg.

Ben Bernanke and his FOMC colleagues will press on with purchases at least through the first quarter of 2014, according to the median estimate in the Dec. 7-10 survey. They are expanding the balance sheet beyond $2.86 trillion in a bid to spur growth and lower an unemployment rate of 7.7%.

“They view this stimulus as what’s needed to sustain the economy” and reinforce improvements in industries such as autos and housing, added John Silvia, chief economist at Wells Fargo & Co.

Bloomberg notes that the FOMC gathers Tuesday for a two-day meeting in Washington and plans to release a statement on policy at around 12:30 p.m on Wednesday. That will be followed by forecasts for growth, unemployment and inflation. Bernanke is scheduled to hold a press conference at 2:15 p.m., after release of the forecasts.

The Fed’s latest round of quantitative easing will total $1.1 trillion, with about $620 billion in mortgage-backed securities and $500 billion in Treasuries, according to the median estimate in the survey, according to Bloomberg.