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A more patient economic policy

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Money Talk > Money Watch

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Don Quixote
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A more patient economic policy  Reply with quote  

http://story.news.yahoo.com/news?tmpl=story&u=/bw/20031118/bs_bw/b3859057

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The economy is cooking. Business spending is rising and the job market has turned up. The pickup in growth, in the U.S. and abroad, has sent commodity prices soaring and fanned fears of a resurgence of inflation. The central banks of Australia and Britain have already raised interest rates, and the U.S. bond market figures the Federal Reserve (news - web sites) will follow suit early next year.

Don't count on it. Although economic growth hit a staggering 7.2% in the third quarter and is expected to settle in at a zippy 4% over the next few quarters, Fed Chairman Alan Greenspan (news - web sites) and his cohorts believe they can take their time before raising rates. Despite investors' skepticism, Fed insiders believe the U.S. is in a unique period where inflation is so low -- and the economy still boasts so much slack -- that they can relax and let things rip. "In these circumstances," Greenspan said on Nov. 6, "monetary policy is able to be more patient."
Post Mon Nov 24, 2003 2:10 am
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Andrew
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What is the Fed considering?  Reply with quote  

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....

Rather, Fed officials could rephrase the idea of keeping rates low without the apparent reference to a time period.

What the Fed will say in its statement on Tuesday has become the main focus of financial markets' interest in recent weeks, since no one expects the central bank to start raising rates for months. Some economists see no increase in rates before 2005, because of lingering doubts about the strength of the economy.

A Reuters survey taken on Friday found 10 of the 22 top bond dealers on Wall Street believe the Fed will drop its pledge to keep policy easy for "a considerable period", and another two said such a decision is possible.



http://www.forbes.com/work/newswire/2003/12/08/rtr1172984.html
Post Mon Dec 08, 2003 5:35 pm
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