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To: jim kelley who wrote (156464)	4/20/2000 8:03:00 AM
From: Lee	Respond to of 176387

Morning Jim,..Re:.I do not think that AG will go to a 1/2 % increase in May. I agree with you, in fact, it may be doubtful the Fed will raise at all! They seem to have committed to a more gradual type tightening in order to assess feedback more carefully and also because no one can get a handle on how exactly the productivity gains offset inflation aspects. <g> Yes you are correct about crude. It shows up with a lag in the PPI and CPI and prices already peaked in March and hopefully will continue down to the low to mid $20s. futures.tradingcharts.com ECI comes out April 27th and if that remains tame, then, given that the Feds biggest fear is wage inflation because of tight labor markets, it would seem improbable that they would jack the rates another 25 bps. Also, housing starts swooned last month and although, a one month number does not make a trend, when combined with other data, maybe the feedback will signal a hold for now. The only worry is the continued higher prices paid by the manufacturers as evidenced in the NAPM and Chicago PMI as well as the PPI. These are not exactly threatening since we are coming off an extremely low level but it is evident that world demand is coming back so we're getting a firming of basic materials and commodity prices. Too much to consider! Actually, too complicated. Plus I heard, (but haven't looked into) the spreads between treasuries and corporate issues are widening and that was what prompted the easing back in Fall '98. All these little things make me think we might hold and watch a while. BWTHDIK! The only worry is that we don't exactly have the resources to maintain the current pace of growth.<g> stls.frb.org Cheers, Lee