The Federal Reserve is likely to maintain its aggressive efforts to lift the US economy out of deep recession but also seek to lay the groundwork for a potential recovery, analysts say.
The Federal Open Market Committee, which opens a two-day meeting on Tuesday, is likely to signal no change in policy since its March gathering, when it added over one trillion dollars to its arsenal to fight the economic crisis.
The FOMC statement due Wednesday is expected to depict a weak economy that still needs extraordinary support, justifying its policy of near-zero interest rates and vast lending facilities to pump up credit availability.
"I don't think the Fed wants to create any excessive optimism," said Adolfo Laurenti, senior economist at Mesirow Financial.
"I think the Fed is encouraged (by recent economic data) but it is too early to announce any turnaround." Laurenti said the Fed led by chairman Ben Bernanke will be trying to manage expectations as financial markets await the impact of the central bank's massive stimulus effort. The economist said the Fed must be ready with a plan to end the stimulus when the economy begins to recover, to avert a surge of inflation.