POLL-Fed seen holding interest rates steady til Q3 (Reuters)
Tuesday, January 22, 2002
reuters.com
Alan Greenspan and his round table of monetary policy-makers are unlikely to raise interest rates before the second half of 2002, when the U.S. economy is expected to be solidly on a recovery track, according to analysts recently polled by Reuters.
"The economy is weak enough and inflation is low enough," said Kurt Karl, chief U.S. economist at Swiss Re, of the key reasons for the Fed to maintain its easy monetary policy.
U.S. economic data in the early days of the new year have been a mixed bag, making it hard for the Federal Reserve to decide when it should reverse its series of 11 interest rate cuts for 2001, which were aimed at boosting an ailing economy that was further hurt by fallout from the Sept. 11 attacks.
Earlier this month, Fed Chairman Greenspan, addressing a California business group, expressed skepticism about the economy's prospects for a swift bounce out of the recession that began last March.
The 28 private economists surveyed by Reuters from Jan. 7 to Jan. 15, on average, forecast that the U.S. federal funds rate, the overnight cost of borrowing among banks, would hold steady at 1.50 percent into the middle of this year, following a final 0.25 percentage point rate cut by the Fed later this month.
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