There appears to be a consensus building that the Federal Reserve will announce further steps to scale back its economic stimulus efforts at the conclusion of this week's meeting on Wednesday.

The Fed is expected to reduce its monthly purchases of Treasury bonds and mortgage backed securities to $65 billion a month, down from $75 billion currently, according to various economists. Fed governors ordered an initial reduction of $10 billion a month following their last meeting six weeks ago, down from the $85 billion in monthly purchases the Fed had been making since December 2012.

"I think the Fed is desperate to extract itself from quantitative easing, and it will continue to scale back the program and end it this year," Bernard Baumohl, chief global economist of the Economic Outlook Group, told the Wall Street Journal's Marketwatch. Other economists and Fed observers have largely echoed that view.

Could push mortgage rates higher

A further reduction in the bond buying stimulus program would likely increase upward pressure on mortgage rates, which have been trending downward in recent weeks.

This week's Fed meeting comes after a rough week on Wall Street, with the Dow Jones falling 3.5 percent and the NASDAQ and S&P 500 both falling more than 2 percent on Friday alone. The markets appeared to be regaining a bit of those losses on Monday.

The Census Bureau also announced Monday morning that new home sales fell by 7 percent in December. It's not thought that either development, nor signs of weakening in some international markets last week in anticipation of the Fed's actions, are enough to cause Fed governors to hold off on further reductions in bond buying.

Bernanke's swan song

The meeting that ends Wednesday will be Ben Bernanke's last as Fed chairman, and it's believed he would like to leave the Fed on a path to wind down the bond buying stimulus program it has pursued for the past five years under his leadership.

Freddie Mac announced last week that its weekly rate survey found that average 30-year mortgage rates had declined to 4.39 percent, their lowest since late November.

Published on January 27, 2014