The U.S. Federal Reserve Building in Washington, DC.
The U.S. Federal Reserve Building in Washington, DC. - 
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Jeremy Hobson: The Federal Reserve wraps up a meeting in Washington today, and markets around the world are waiting to see if the rumors are true and more monetary stimulus is on the way.

Julia Coronado is chief economist with the investment bank BNP Paribas. She's with us from her office here in New York. Good morning.

Julia Coronado: Good morning.

Hobson: Well Julia, what do you think the Fed is going to do?

Coronado: I think what they are going to do is take some action; they're going to extend their current Operation Twist program in order to keep financial conditions supportive of the economy. And then I think that they might hint that they're trying to think through a mortgage purchase program to further ease credit conditions.

Hobson: But each time they try to ease credit conditions, as you say, the big criticism is that it's not trickling down to the average person -- that the average person out there can't go out and get a mortgage; they just can't get credit.

Coronado: And in this sense, we might be at a good time for the Fed to take action because we've seen the HARP program expanded; we've seen people that have been blocked from being able to refinance. And so if you give a little kicker to mortgage rates and bring them even lower, you'll get people who have already refinanced, refinancing again, and those that are being reached by the new programming refinancing and it could create a nice virtuous circle.

Hobson: That leads me to my next question, which is: how much of this is about the housing market? Every time the Fed steps in with stimulus, are they trying to kickstart the housing market?

Coronado: Well, they have made the argument that without participation from the housing market, we are unlikely to achieve above-trend growth -- which is typically what we see in a recovery. And that is historically true; housing is a critical piece of every recovery; it does respond to low interest rates and tends to be the sector that gets the economy moving. So it's been true historically, we haven't see that this time around, and it certainly is one of the reasons the recovery continues to be disappointing.

Hobson: We'll be watching to see what they do. Julia Coronado, chief economist with the investment bank BNP Paribas. Thanks as always.

Coronado:  It's always a pleasure.