Another Forum on Interest Rates, Inflation and the Federal Reserve
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Investors See Rate Hike as Necessary Medicine
nytimes.com
Old story on the issue:Tracking the Wealth Effect
nytimes.com
Old story on the issue:Greenspan Warns of Rise in Interest Rates in March
Greenspan Warns of Rise in Interest Rates in March
nytimes.com
Wednesday March 22 11:54 PM ET
Forbes Rips Fed Interest Rate Hikes
By BRUCE DUNFORD, Associated Press Writer
HONOLULU (AP) - Former Republican presidential candidate Steve Forbes (news - web sites) said Wednesday that Alan Greenspan's ``bogus' policy of slowing economic growth by raising interest rates is like a doctor purposely making a healthy person sick.
Speaking at the closing meeting of the Pacific Basin Economic Council, Forbes took repeated snipes at the Federal Reserve chairman and his decision Tuesday to raise short-term interest rates by a quarter of a percentage point for the fifth time since June.
``Prosperity does not cause inflation,' the publishing magnate said. ``That's a bogus idea.'
dailynews.yahoo.com
The great rate conundrum
Five rate hikes in eight months haven't slowed the stock market. Here's why.
By Staff Writer M. Corey Goldman
March 25, 2000: 11:19 a.m. ET
NEW YORK (CNNfn) - It has become something of a conundrum for Federal Reserve Chairman Alan Greenspan and his colleagues: The U.S. stock market's seemingly unstoppable trek upward and the Fed's ostensibly futile attempts to bring it -- and the aura of wealth it's created -- in line.
Since the end of June, when the Fed pulled its inflation-fighting gun out of its holster and began firing quarter-point rate increases at the economy, the U.S. stock market has risen to new heights. With the exception of a few pullbacks here and there, the two best-known indices have posted significant gains.
Higher rates are supposed to hurt stocks. The higher the fed funds rate goes, the more expensive it is supposed to be to finance lines of credit -- something that is supposed to discourage companies from borrowing money and spending capital -- a phenomenon that usually dings the bottom line.
And yet they're not. Earnings continue to look promising among "old economy" and "new economy" companies alike, and very few firms have signaled that a full point-and-a-quarter rate increase is hampering their ability to produce a profit -- or in the case of many of the dot.coms, to narrow their losses.
So what gives? The cost of borrowing for companies has actually fallen, despite the Fed's recent spate of rate increases.
cnnfn.com
Wednesday March 22 6:57 PM ET
Greenspan: Fed to Target Abusive Lending
WASHINGTON (Reuters) - The powerful Federal Reserve is seeking ways to combat ``abusive lending' that targets poorer people who are unable to afford the repayments, Chairman Alan Greenspan said on Wednesday.
Greenspan criticized cut-throat competition among lenders to place credit cards and loans in the hands of consumers -- who are fueling the longest-running expansion in history.
``Of concern are abusive lending practices that target specific neighborhoods or vulnerable segments of the population and can result in unaffordable payments, equity stripping, and foreclosure,' the Fed chief said.
dailynews.yahoo.com
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