US Fed sources say rate hike may NOT be soon-Post
WASHINGTON, April 27 (Reuters) - New data may have eased the
concerns that prompted U.S. Federal Reserve policymakers to drop
their neutral stance on interest rates last month, the
Washington Post reported Tuesday, quoting unnamed Fed sources.
The newspaper quoted the sources as saying that the central
bank's decision to "lean" toward higher short-term rates at its
March 31 meeting didn't necessarily mean that higher rates were
on the way soon.
The Post also said Fed officials would be happy if the stock
market turned flat, blaming rising shareholder wealth for the
rise in consumer spending.
U.S. stocks took a sharp dive Monday after a report in the
Wall Street Journal said the Federal Reserve moved from a
neutral stance to a tightening bias at the March meeting of its
rate policy committee, concerned that the economy seemed to be
overheating.
The Federal Reserve declined Monday to comment on the Wall
Street Journal's report. Its policy-making body, the Federal
Open Market Committee, next meets on May 19.
At the March meeting, many of the officials present
expressed surprise at how robust the economy appeared to be, the
Post said, quoting the Fed sources.
The officials worried that if the economy didn't cool off,
it could cause inflation to worsen later.
But since that meeting, some Fed officials have become less
worried about the first quarter's rapid growth because of
reports suggesting that such a slowdown has already begun, the
Post said.
They cited payroll data released last month, which showed a
decline in jobs, and flat retail sales figures for March after
strong rises in January and February.
Some Fed officials told the paper they could be patient and
wait for more information about how the economy is progressing
and how much of a drag the Asian crisis was turning out to be,
especially since inflation had been all but non-existent this
year.
REUTERS
Rtr 23:50 04-27-98 |
