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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (29658)	11/11/1999 4:21:00 AM
From: IQBAL LATIF	Respond to of 50167

Some jitters until 16th for sure as Oil and this contributes to rate hike possibility.. Inflation data add to doubt on rate rise By Gerard Baker in Washington US wholesale prices dropped in October for the first time in eight months, but the underlying rate - stripping out food and energy costs - jumped again, adding to uncertainty about whether the Federal Reserve will raise interest rates next week. The Labour Department reported yesterday that prices paid by producers for finished goods fell by a seasonally adjusted 0.1 per cent in October from a month earlier, taking the increase in the previous 12 months to 2.7 per cent, down from an annual rate of 3.2 per cent in September. But, stripping out food and energy costs, which tend to fluctuate more widely from month to month, prices rose by 0.3 per cent last month, following a 0.8 per cent leap in September. The year-on-year rate of increase dropped to 1.9 per cent. The mixed report left investors no nearer knowing what the Fed will do when its open market committee meets next Tuesday to consider whether an increase in short term rates from the current 5.25 per cent is necessary. That meeting now seems certain, in fact, to be attended by an unusual level of uncertainty. In the past, Alan Greenspan, the Fed chairman, and other senior central bank officials have done their best to signal their intentions to financial markets to avoid the potentially destabilising effects of an unexpected move in interest rates. But the economic data have continued to send ambiguous signals over the last month, with evidence of strong demand growth - in the region of 4 per cent per year - but little inflation, and the Fed seems to have chosen to leave the decision this time until the last minute. Financial market economists are divided over whether the Fed will raise rates, though a small majority now appears to think there will be no change. The Fed's two earlier interest rate increases of 0.25 per cent each this year have pushed up long term rates, slowing demand in the housing market and other important sectors. "There are clear signs the economy is starting to slow to a more sustainable rate of growth. Furthermore Mr Greenspan really seems to believe that there has been a big improvement in productivity in the last few years," said Mickey Levy, chief economist at Bank of America in New York. "They will combine to keep the Fed on hold." Tomorrow the Commerce Department will publish its initial estimate of retail sales in October - an important clue as to whether consumer demand growth has started to slow in the fourth quarter of the year. It will also publish productivity and labour cost figures, which are expected to provide further confirmation of the improvements in the economy's potential growth Mr Greenspan has celebrated in recent weeks. And on Tuesday, just before the Federal Open Markets Committee meeting, the Fed itself will publish industrial production figures for October.