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Fed Bond Buying May Risk Price Rise Similar to 2004

The Federal Reserve may be underestimating the inflation outlook for the second time in less than a decade as it prepares to pump more money into the U.S. economy.

The Fed today will probably restart purchases of bonds to spur the economy even as growth is likely to accelerate at a 2.6 percent annual pace in the second quarter of next year from 2 percent last quarter, according to Bloomberg News surveys of economists. The Fed will likely pledge to buy $500 billion or more in securities, according to 29 of 56 economists surveyed.