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Fed nears agreement on how to exit stimulus

Federal Reserve Chairman Ben Bernanke speaks during a hearing of the Senate Banking, Housing and Urban Affairs Committee.

JEREMY HOBSON: Well the President of the New York Federal Reserve said this morning that commodity prices are pushing inflation higher right now. But he expects that trend will reverse soon.

He's speaking just a day after the Fed released the details of its latest meeting at which policy makers discussed an exit strategy. The Fed's $600 billion bond buying program ends next month.

Diane Swonk is chief economist with Mesirow Financial. She joins us now live from Chicago as she does each Thursday. Good morning Diane.

DIANE SWONK: Good morning.

HOBSON: Well what did we learn about the Fed's plan from the minutes that were released yesterday?

SWONK: Well, what we've learned is the Fed plans a very gradual exit from its strategy to support the economy. Because the economy is still -- the recovery is going on, but it's still pretty fragile. So the fed plans to go very slowly. Eventually it will raise rates and then it will start selling off parts of its balance sheets. But all this is in the context of being gradual.

HOBSON: And, you know the economy has been recovering albeit slowly, over the last several quarters. How vital is the Fed at this point to sort of propping up the U.S. economy?

SWONK: Well the reality is both the Fed and the federal government are no longer the stimulus they once were in terms of providing growth. The economy really needs to get on its own footing and move forward on its own now. The fed isn't pulling the rug out from underneath us but there's really not more it can do to juice up the economy which means we'll continue to muddle along but we're not going to see a surge in growth any time soon.

HOBSON: Diane Swonk, chief economist with Mesirow Financial, thanks so much as always.

SWONK: Thank you.

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