Econ: "Basis Points"--John M. Berry, The Post, 8/13/00...
washingtonpost.com
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Edited for ease of reading.
>>> Basis Points
By John M. Berry
Sunday , August 13, 2000 ; H02
Great news on productivity reported last week was the final straw for the analysts holding out for a rate increase when Federal Reserve policymakers meet next week.
Now there is a virtual consensus that the Fed's target for overnight rates will remain at 6.5 percent for some time to come.
Even though retail sales rose 0.7 percent last month, consumer spending gains clearly have diminished and the outlook for economic growth for the second half of this year is now around 4 percent, down substantially from the pace of the first half and down even more compared with the latter part of 1999.
Productivity among nonfarm businesses has been rising faster than 4 percent, suggesting that with growth around that rate, the jobless rate might even rise slightly.
For Fed officials worried that tight labor markets were going to lead to inflationary wage increases, this was welcome news and a key reason they are likely to keep interest rates on hold next week.
Tomorrow, Treasury will sell $9.5 billion in three-month bills and $8.5 billion in six-month bills. In when-issued trading Friday, the bills yielded 6.29 percent and 6.43 percent, respectively.
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