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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (39271)	6/13/2000 6:23:00 PM
From: Original Mad Dog	Read Replies (1) \| Respond to of 63513

Sure looks to me like the Fed is signalling no rate hike in June: dailynews.yahoo.com Tuesday June 13 4:11 PM ET McDonough Sees Signs Economy Slowing By Marjorie Olster ALBANY, N.Y. (Reuters) - The U.S. economy may be slowing from the torrid pace that prompted the Fed to raise interest rates six times in the last year, Federal Reserve Bank of New York President William McDonough said on Tuesday. Answering questions after giving a speech to the College of St. Rose, the vice chairman of the interest-rate setting Federal Open Market Committee said data on the housing, automotive and durable goods sectors were all more subdued. ``Is (a) slowdown beginning to be visible?'' he asked, in light of a report released on Tuesday showing that U.S. retail sales fell for the second month in a row. ``There are a number of variables that would tell you 'yes'.'' Earlier on Tuesday, the Commerce Department reported that U.S. retail stores rang up weaker sales in May after falling in April, raising expectations the Federal Reserve will keep interest rates steady at its next meeting on June 27 and 28. The retail sales data came on the heels of other economic indicators that have convinced some analysts the U.S. central bank's year-long campaign of raising borrowing costs to stop the economy from overheating may be starting to work. In a separate appearance, Federal Reserve Chairman Alan Greenspan neither discussed the recent economic reports nor provided any clues about future U.S. interest rate policy. Instead, he gave a largely academic speech on productivity gains, which he said were mostly ``structural'' and largely ''irreversible.'' U.S. non-farm productivity, or output per worker per hour outside agriculture, rose at an annual rate of 2.4 percent in the first quarter, the Labor Department reported earlier this month. Productivity shot up 6.9 percent in the fourth quarter. Greenspan, in a speech to the New York Association for Business Economics, hailed the gains in productivity for keeping inflation ``subdued'' over the past four years in the face of rising wages and strong profits. Fed Seeking To Soften Demand McDonough said he thought the economy could grow by around 4.5 percent a year without much inflation, due in part to gains in productivity. He noted, however, that the U.S. economy has been growing at an even stronger pace. ``What the Fed is seeking to do is to reduce the level of demand somewhat,'' he said, saying central bankers need to figure out at what point ``the monetary policy tightening in the pipeline is enough to achieve this goal.'' U.S. Gross Domestic Product rose at an annual rate of 5.4 percent in the first three months of 2000, down from a sizzling 7.3 percent gain in the last quarter of 1999. In his speech, McDonough said it was too soon for central bankers to declare victory against inflation as the economy was beginning to show signs of ``imbalance and strain.'' Backing up his warning, he pointed to strong growth in consumer demand and a widening U.S. current account deficit -- the broadest measure of the imbalance in U.S. trade -- as evidence that the economy was roaring ahead. He said he would like to see the current account deficit fall closer to two percent of gross domestic product from the level of roughly 4 percent seen at the end of last year. McDonough said this shortfall made the United States too dependent on foreigners' investments in U.S assets.