Fed seen maintaining bond-buying, but divisions remain

Critics warn that the bond buying, which has tripled the Fed's balance sheet to almost $3 trillion since 2008, might stoke inflation or trigger an asset bubble that could tip the economy back into recession when it bursts.

Some policymakers advocate adopting set levels of certain economic variables that would signal when the central bank thinks the time is ripe to stop the purchases, much like the "thresholds" it has adopted to help guide the market's understanding of when interest rates are finally likely to rise.

An unexpected halt in the buying, which accounts for a considerable part of the demand for U.S. Treasury debt, could send long-term borrowing costs shooting up and damage the recovery.

The president of the Boston Federal Reserve Bank, Eric Rosengren, has led the charge for bond-buying thresholds, arguing the central bank should continue the purchases until unemployment falls under 7.25 percent.

Other officials think differently, and it may take months to build a consensus -- if one can even be built.

Since September, when it launched QE3, the Fed has said it would buy bonds until it saw a substantial improvement in the outlook for the labor market -- a mark many analysts think won't be reached this year.

More than half of 41 economists polled by Reuters earlier this month

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