Here is the whole FERGUSON article for you guys to read:
Ferguson throws cold water on cut
Puzzler: Spending strong despite drop in confidence
By Rex Nutting, CBS.MarketWatch.com
Last Update: 2:21 PM ET Feb 27, 2001
NEW YORK (CBS.MW) - The drop in consumer confidence isn't conclusive evidence that the
economy is weakening further, Federal Reserve Vice Chairman Roger Ferguson said Tuesday.
"A somewhat puzzling feature of the recent period has been that, despite the sharp weakening in
sentiment, household spending appears thus far to have held up well," he said. "How these
apparently conflicting signals will be resolved going forward is not at all apparent from today's
vantage point, and will bear close scrutiny." Read his speech.
Ferguson's comments imply that the falling consumer confidence numbers by themselves are not
pushing him to vote to cut rates right now.
The Conference Board reported Tuesday that its consumer confidence index fell to 106.8 in February,
the lowest since June 1996. The University of Michigan's consumer sentiment index, which will be
leaked Friday, has shown a similar decline in consumers' expectations about the future.
Wall Street has been abuzz with speculation that the Federal Open Market Committee would cut
interest rates this week, in part because of the weak consumer confidence numbers. The FOMC's
next scheduled meeting in March 20, although the Fed cut rates on Jan. 3, outside of its regular
meeting. See full story.
Fed Chairman Alan Greenspan will update his State of the Economy testimony at 9:30 a.m.
Wednesday at the House Financial Services Committee. Two weeks ago, Greenspan said the Fed
believes the downturn will be relatively short-lived, but acknowledged that no one can predict the
essentially non-rational aspects of confidence. See full story.
Ferguson made the comments in the prepared text of his speech to the Securities Industry
Association and the University of North Carolina School of Law. The text was released in
Washington.
The Fed vice chairman said inflationary pressures will likely be contained going forward. He said
lower demand would reduce energy supply constraints and indicated that markets are expecting
energy prices to fall in the next months. |
