Wednesday April 5 2:12 PM ET
Greenspan Says Fed Not Targeting Stock Prices
Reuters Photo
WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan said on Wednesday a sharp rise in equity prices risked fostering inflationary imbalances in the U.S. economy but insisted the central bank was not out to hurt stock prices.
Speaking at a White House conference on the ``New Economy', Greenspan reiterated the Fed was worried by the strong growth in demand that was outstripping supply in the U.S. economy, a signal that the central bank remains firmly on track for further interest rate rises in the months ahead.
While Greenspan said the Fed did not target equity prices, he issued a veiled warning about the recent run-up in the price of technology shares. ``History will judge' whether the expectation of sharply higher profits for technology companies that had driven the gains in their share prices was 'prescience' or ``wishful thinking,' he said.
``The persuasive evidence that the wealth effect is contributing to the risk of imbalances in our economy...does not imply that the most straightforward way to restore balance in financial and product markets is for monetary policy to target asset price levels,' he said.
http://dailynews.yahoo.com/h/nm/20000405/ts/economy_fed_1.html
This story hits on none of the points I picked up on....this story may be better?
04/05/00- Updated 04:55 PM ET
Greenspan: Fed must contain inflation
Greenspan: Low inflation good for economy
WASHINGTON - Federal Reserve Chairman Alan Greenspan warned Wednesday that the Fed must be "careful" to make sure inflationary pressures remain contained and it should focus on broader economic imbalances, rather than changes in the prices of assets, such as stocks. In remarks for delivery at a White House economic conference, Greenspan said: "Should changes in asset prices foster economic imbalances, as they appear to have done in recent years, it is the latter we need address, not asset prices." Greenspan did not make any direct comments on the recent stock market turbulence and its likely effect on monetary policy. But he did make a veiled reference to recent market turmoil, saying, "readings from financial markets, despite their recent upheavals, suggest that participants perceive the most likely outcome to be a gradual adjustment to more balanced noninflationary growth."
http://play.rbn.com/?usat/usat/demand/m0405260.ra')
I feel more comfortable a .50 increase is out of the question going forward. We can live with one more .25 if they must? |
