NEW YORK – Wall Street expects the Federal Reserve to continue its program of debt purchases through 2013 in an effort to prop up the economy despite evidence of an improved job market, according to a Reuters poll conducted on Friday.
All of 15 primary dealers - the large financial institutions that deal directly with the Fed - said they expect the central bank to continue buying debt until at least late this year, and nine of the 15 expect the buying to continue into 2014.
The poll was conducted on Friday after government data showing U.S. employers added a larger-than-expected 236,000 workers to their payrolls in February and the jobless rate fell to a four-year low of 7.7 percent.
The median of forecasts from the 15 primary dealers was for the Fed to buy a total of $1 trillion of assets under its latest stimulus program. Currently the central bank is buying about $85 billion of mortgage-backed securities and Treasuries per month under the open-ended program.
Forecasts for the size of the program ranged from $750 billion to $2.3 trillion.
Of the 15 primary dealers who answered the poll, 13 expect U.S. unemployment to dip to the Fed's target level of 6.5 percent in 2015, while two expect it to reach that level in the fourth quarter of 2014.
The median of forecasts from the 15 primary dealers was for the automatic government spending cuts that began on March 1, known as "sequestration," to subtract 0.5 percentage from gross domestic product this year. Estimates ranged from 0.2 percent to 0.55 percent.
(Reporting by Chris Reese; additional reporting by Richard Leong, Karen Brettell, Ellen Freilich, Luciana Lopez and Pam Niimi; Editing by Chizu Nomiyama)