A police officer guards the Federal Reserve building on September 10, 2011 in Washington, DC. Ahead of tomorrow's tenth anniversary of the September 11 terrorist attacks, officials have warned of heightened security threats. (Photo by Brendan Hoffman/Getty Images)
WASHINGTON (AP) - The Federal Reserve meets this week and could try to soften the blow from the tax increases and spending cuts of the fiscal cliff if Congress can't reach a budget deal.
The Fed is expected to announce a new bond-buying plan to support the U.S. economy by further reducing long-term interest rates and encouraging borrowing by companies and individuals.
But Chairman Ben Bernanke warned last month that the Fed's actions wouldn't rescue the economy in a fiscal cliff scenario.
If higher taxes and government spending cuts were to last for much of 2013, most experts say the economy would sink into another recession.
Once its two-day policy meeting ends Wednesday, the Fed is likely to say it will start buying more long-term Treasurys to replace a program that expires at year's end.
(Copyright 2012 The Associated Press. All rights reserved.)