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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (9903)	11/16/1999 2:50:00 PM
From: Wally Mastroly	Read Replies (1) \| Respond to of 15132

..from Bloomberg, some details & comments on FOMC rate rise: bloomberg.com

To: Wally Mastroly who wrote (9903)	11/16/1999 5:22:00 PM
From: Justa Werkenstiff	Respond to of 15132

Wally: Yep, I broadsided that one. What can did we learn? Like I said last night, Greenspan is PREEMPTIVE. Also, he is focused on the growth rate of the economy and the shrinking labor pool. He still has his Phillips curve in the back pocket. Now who thinks these rate increases are going to slow the economy sufficiently in the next three months to call off the possibility of the Fed. coming back once again? Now who thinks the labor pool is going to grow between now and then? How may more prisoners are there? If the market continues to surge it will plant the seeds of its own correction. Query: is the new era stock market more resilient to rate increases? Here is the FRB text: The Federal Open Market Committee today voted to raise its target for the federal funds rate by 25 basis points to 5 1/2 percent. In a related action, the Board of Governors approved a 25 basis point increase in the discount rate to 5 percent. Although cost pressures appear generally contained, risks to sustainable growth persist. Despite tentative evidence of a slowing in certain interest-sensitive sectors of the economy and of accelerating productivity, the expansion of activity continues in excess of the economy's growth potential. As a consequence, the pool of available workers willing to take jobs has been drawn down further in recent months, a trend that must eventually be contained if inflationary imbalances are to remain in check and economic expansion continue. Today's increase in the federal funds rate, together with the policy actions in June and August and the firming of conditions more generally in U.S. financial markets over the course of the year, should markedly diminish the risk of inflation going forward. As a consequence, the directive of the Federal Open Market Committee adopted is symmetrical with regard to the outlook for policy over the near term. In taking the discount rate action, the Federal Reserve Board approved requests submitted by the Board of Directors of the Federal Reserve Banks of Boston, Cleveland, Richmond and Kansas City. The discount rate is the rate charged depository institutions when they borrow short-term adjustment credit from their district Federal Reserve Banks.