Federal Reserve's Parry Upbeat on Economy NEW YORK Reuters) - The head of the Federal Reserve Bank of San Francisco increasingly believes the U.S. economy can grow strongly without triggering inflation, Barron's financial newspaper reported in its Sept. 18 edition.
The bank's president, Robert Parry, thinks the economy can grow at a 5 percent annual rate over the next couple of years without overheating, the newspaper said. The economy expanded at a 5.3 percent rate in the second quarter of this year.
Barron's said that, in an interview, Parry did little to counter many analysts' outlook that the economy was slowing under the impact of six rate hikes by the central bank.
Parry said the Federal Reserve should always be concerned about inflation. However, he showed little alarm over recent trends, including higher oil prices.
The Federal Reserve's rate-setting panel meets Oct 3. Analysts widely expect it to leave short-term interest rates intact.
Parry's comments ``contained more than a hint of optimism that the best days of the current expansion might lie ahead,'' the newspaper said.
Parry's upbeat outlook lies in the strong growth in U.S. productivity, or output per worker.
``I think it would be dangerous to assume we're going to see productivity accelerate for the indefinite future,'' Parry said.
However, he added, ``I don't see any reason to assume that we're going to move back to the lackluster productivity that characterized the 1970s and 1980s.'' |
