When the Federal Reserve Committee meets in the US this week, it will have digested some conflicting information. There has been a recent deterioration in economic data from the world’s largest economy. Notably there were substantial revisions to unemployment figures, suggesting the recent expansion in job creation may be relatively short-lived.

These are not the only disappointing statistics. Housing sales have been weak with sales of ‘previously owned’ homes falling for the third time in four months, against market expectations. This suggests, at best, an uneven recovery in the housing market.  Meanwhile the widely-watched Philadelphia Federal Reserve index of business conditions showed a significant weakening from March to April. Figures from New York were even worse.

Gloomy as this may sound, however, it should be weighed against a buoyant round of first-quarter earnings statistics. Around a fifth of S&P 500 companies have now reported and, of those, more than 80% have beaten expectations.

The bears have suggested that expectations had been revised down so far they were not particularly challenging, but areas such as the big technology groups have been particularly strong. Some economists have suggested these corporate earnings are a better indicator of the strength of the economy as they are less likely to have been blown about by seasonal factors.

So where does all this leave the decision-makers of the Federal Reserve? Nothing has changed sufficiently to suggest Ben Bernanke will shift his original position of no interest rate rises until 2014 at the earliest. However, the real interest for the markets is whether there will be any more quantitative easing.

In truth, not many analysts expect more quantitative easing. A few recent economic figures have been weaker, but it is still too early to extrapolate a trend and corporate earnings suggest there is still momentum in the economy. The rise in the oil price may contribute to higher inflation and the Fed is unlikely to want to risk making the situation worse. Also, at some point, policymakers have to start bringing the economy out of crisis mode.

However, the markets have become fond of quantitative easing and they are unlikely to be happy about its end, at least in the short term. Even though the end of quantitative easing suggests the economy is doing sufficiently well to live without it, markets are likely to dip on the Fed’s decision. However, investors should take heart if quantitative easing is no longer necessary.

April 2012