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Expectations high for Fed to announce major action

WASHINGTON — If the world’s investors are right, the Federal Reserve is about to take a bold new step to try to invigorate the U.S. economy.


And many expect the Fed to unleash its most potent weapon: a third round of bond purchases meant to ease long-term interest rates and spur borrowing and spending. It’s called “quantitative easing,” or QE.


Others foresee a more measured response when the Fed ends a two-day policy meeting Thursday. They think it will extend its timetable for any rise in record-low short-term rates beyond the current target of late 2014 at the earliest.


Fed officials began their discussions Wednesday and will end with an announcement of any decision around 12:30 p.m. Eastern time. Later, Chairman Ben Bernanke will hold his quarterly news conference.


The stock market edged higher Wednesday, partly in anticipation of Fed action and after the highest court in Germany cleared the way for that country to contribute to Europe’s rescue fund to help indebted governments.