“The Fed’s rhetoric will get the markets ready for the real possibility of expanding their balance sheet at a later meeting this year,” Clarida, a Columbia University professor and global strategic adviser for Pimco, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene.

The central bank bought $300 billion of U.S. government securities last year in a policy known as quantitative easing. It announced on Aug. 10 it would reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in longer-term Treasuries, spurring speculation the purchases would be expanded if the economic recovery showed signs of floundering.

Twenty seven of 58 economists polled by Bloomberg News this month see growth in 2011 below the 2.5 percent to 2.8 percent pace Fed policy makers peg as the long-term trend. Twenty eight see the jobless rate rising above last month’s 9.6 percent sometime in the next nine months. That combination would constitute a growth recession.

Divisions of opinion at the Fed about the extent of the need for further stimulus make it more likely that the central bank commits to purchasing Treasuries in an amount closer to $500 billion than $1 trillion, Clarida said.

Fed Purchases

“There’s a split on the committee,” he said. “I would be surprised, knowing what I know now, if they went for a shock-and-awe number of $1 trillion, but you certainly can’t rule that out.”

The Fed has bought $28.102 billion of securities since it began the reinvestment program on Aug. 17. Policy makers are seeking to keep holdings in the System Open Market Account, or SOMA, at about $2 trillion.

“Whenever you pursue a non-traditional policy” it’s possible the market will misinterpret the intentions of policy makers, Clarida said. “A big program could signal even greater concern than the markets have already priced in.”

The longest and deepest U.S. recession since the Great Depression ended in June 2009, lasting 18 months, the National Bureau of Economic Research said today. Marked by a collapse in housing and sub-prime mortgage lending that triggered a global meltdown in financial markets, the downturn trailed the 43-month Great Depression that lasted from 1929 to 1933, surpassing the 16-month contractions of 1973-75 and 1981-82.

Pimco’s $248 billion Total Return Fund, the world’s largest mutual fund, handed investors a 10 percent gain in the past year, beating 67 percent of its competitors, according to data compiled by Bloomberg.