Fed May Extend Operation Twist, Grow Balance Sheet, Goldman Says

The Federal Reserve is expected to start a new asset purchase program at a meeting this week, Goldman Sachs Group Inc. (GS) chief economist Jan Hatzius said.

The Fed may expand its balance sheet, extend its so-called Operation Twist and/or lengthen its short-term interest rate guidance beyond late 2014, Hatzius said in an e-mailed report to clients today.

“A decision not to ease is tantamount to a tightening,” he said. “At this point we’d be quite surprised if we saw no easing.''

The Fed committee is expected to lower its forecast for real economic growth and raise its forecast for the unemployment rate “significantly,” Hatzius said.

To contact the reporter on this story: Mark Bentley in Istanbul at mbentley3@bloomberg.net

To contact the editor responsible for this story: Benjamin Harvey at bharvey11@bloomberg.net

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