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

To: Justa Werkenstiff who wrote (14434)	6/14/2000 2:41:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Greenspan said to see less pressure to raise rates By Anthony Boadle WASHINGTON, June 14 (Reuters) - Argentine Economy Minister Jose Luis Machinea said on Wednesday that Federal Reserve Chairman Alan Greenspan had suggested that the arguments for raising U.S. interest rates were becoming less compelling. Speaking to reporters after a meeting with the U.S. central bank chief, Machinea said Greenspan had told him he saw some indications the U.S. economy was slowing but that seasonal factors may have distorted some of the data. ``From what I have inferred about what he told me, we are obviously in a much better situation than we were 20 or 30 days ago in terms of expectations of interest rates,'' Machinea said. ``Either they won't go up or they will go up less.'' The Fed has raised interest rates six times in the past year to cool the U.S. economy and head off inflationary pressures, but recent data has shown inflation relatively contained and the pace of economic growth slowing. The release earlier on Wednesday of data showing only a modest rise in the May Consumer Price Index has heightened market speculation that the U.S. central bank will leave interest rates unchanged at its June 27-28 policy meeting. Machinea quoted Greenspan as saying his mind was not yet set on what the Fed should do regarding borrowing costs. ``...nobody can be sure what will happen with interest rates. Not even he (Greenspan). Not even he will know for certain, he told me, until he finishes studying the indicators,'' Machinea said. Speculation that the economy was slowing was triggered earlier this month by the release of the May payrolls report that showed a surprising decline in private sector hiring. But many economists and Fed officials have expressed scepticism about the jobs report, saying it may have been influenced by one-off factors. Machinea, who was accompanying Argentine President Fernando de la Rua to the U.S. capital, said Greenspan expressed doubts about what the recent U.S. economic data was saying. ``He told me some indicators are showing a slowdown in the U.S. economy but that there are also some seasonal factors at play and so one has to continue looking at these indicators carefully to see how much is real and how much is due to seasonal factors,'' Machinea said. In addition, he said Greenspan was still worried about the price of oil and inflationary risks posed by low oil inventories. Argentina has a currency board that pegs its peso at par to the dollar, so its own interest rates are heavily influenced by what happens in the United States. It therefore has a vested interest in seeing U.S. interest rates, which determine borrowing costs in much of the world, come down. Machinea this week revised Argentina's growth forecast for this year to 3.5 percent from 4 percent, admitting that his country was recovering more slowly than expected from a painful recession. 14:19 06-14-00